The Congress Party-led United Progressive Alliance completes three years of coming to power for a second term on Monday. In that period, all major fiscal, monetary and market-related markers have shown a decline. Even inflation, which has come down in the past few months due to the Reserve Bank of India's tight liquidity regime, is still not within the central bank's comfort zone. Here is the UPA-II's term, as seen through the numbers.
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Markets: The equity markets, a popular gauge of economic performance, have not been kind to the UPA this past year. Both the leading indices of the country have lost a third of their value since UPA-II came to power for a second term on May 22, 2009. The Bombay Stock Exchange’s benchmark Sensex has fallen 32.94 per cent since May 22, 2009, while the National Stock Exchange’s Nifty has lost 33.62 per cent in the same period.
Gross Domestic Product: The key market of economic growth is the gross domestic product, or the total output of a country’s economic efforts. On that parameter, the UPA-II has done poorly in the past fiscal year, or between April 2011 and March 31, 2012. When it came to power in May 2009, the GDP growth rate for fiscal 2009 was 9.1 per cent, and hit a high of 9.8 per cent in October 2009. GDP came in at 8.4 per cent for the next two years – which was commendable given the global financial crisis and the resultant slowdown – but has slipped to mere 6.9 per cent in FY12. Admittedly, the world economy has taken a few knocks this past fiscal over the euro zone crisis and rising oil prices, but the government’s failure to execute any major economic reforms also played a part.
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Fiscal deficit: The most critical element of government planning lay in tatters at the end of fiscal 2012. The fiscal deficit, which had been projected at 4.6 per cent of GDP in the Budget Speech in March 2011, ended up at 5.9 per cent. Fiscal deficit for 2009-2010 was 6.5 per cent, but that was primarily because a fiscal stimulus in the wake of the global financial crisis that followed after the collapse of Lehman Brothers Holdings Inc. It fell to 4.9 per cent in FY-11, but has now soared to 5.1 per cent. For 2013, it is projected at 5.9 per cent of GDP, or Rs5.13 trillion.
Rupee: The Indian currency has lost 9.53 per cent of its value against the dollar since May 22, 2009 and 17.51 per cent in the past 12 months. It has been hit the most in the past week, when it hit record lows over three consecutive days, falling to a lifetime bottom of 54.91 on May 18, 2012. The last time it hit an all-time low was in mid-December, while the highest was 43.85 in July 2011.
Inflation: The annual rate of inflation, based on monthly wholesale price index (WPI), stood at 7.23% for the month of April, 2012 as compared to 9.74% during the corresponding month of the previous year. Indeed, India has been battling near double-digit inflation for the past two years, but credit for keeping it under control must go to the Reserve Bank of India. A high interest rate regime has curbed loose money and kept inflation in check. Additionally, lower demand because of a slowing economy has also brought down headline inflation.
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