10 Years of UPA versus NDA Governments: Complete Analysis!
India, the world’s fastest-growing economy, has been governed by the two oldest and major political parties — UPA and NDA — in the last decades.
The United Progressive Alliance (UPA), led by Indian National Congress, popularly called Congress Party, was in power from 2004 to 2014. In contrast, The National Democratic Alliance (NDA) is led by Bharatiya Janata Party (BJP), which took charge in 2014 and has been in power for nine years.
Both political parties have implemented a unique set of economic policies and guidelines to deal with diverse challenges faced by the Indian economy. While the Indian National Congress focused on Inclusive growth, the Narendra Modi-led NDA aimed to prioritize social reforms, digitization, and the Make in India campaign.
As UPA and NDA have served the nation for decades, it will be interesting to analyze and compare their progressive policies, performance, and impact on the Indian economy.
In this comparative analysis of 10 years of the UPA versus NDA government, we aim to provide a detailed comparison of UPA vs. NDA based on GDP growth, inflation, fiscal deficit, and employment rate.
10 Years of UPA Versus NDA Governments: Is Modi Government Outperformed?
1. GDP Growth
Gross domestic product (GDP) is considered one of the key indicators to measure the performance of an economy. During the UPA government, the Indian economy grew 7.6% from 2004–05 to 2013–14. Moreover, the highest GDP growth under the UPA regime was 10.3% in 2010–11.
However, the second term of the UPA government was worse than its first term, resulting in an overall growth rate of 7.5%.
On the other hand, Narendra Modi’s led NDA government maintained a GDP growth of 6.9% from 2014–15 to 2021–22. The highest growth rate during the NDA regime was 8.2% in 2016–17.
2. Inflation
Narendra Modi’s BJP government has genuinely managed the inflation in India. Mr. Modi took charge as prime minister of India in 2014, when the inflation, calculated as CPI, was 7.72% and 9.21% with food inflation. During the tenure of the UPA government, the highest inflation rate was 12.2% in 2010–11.
Under his governance, the average inflation, rural and urban combined, was recorded at 4.8% and the highest at 5.9% in 2018–19. During this tenure, food prices increased by just 0.13%.
Although there is a pitfall, global inflation was very high during the UPA government, especially in the second tenure, when crude oil was priced at $100 per barrel, and metal prices were too high. Secondly, the MSP set by the UPA government was high, contributing to some role in rising inflation.
The Modi government has set the MSP rate quite less than the UPA government, which helped them balance the inflation in the country.
Related: India’s Defense Sector Moving Towards Atma Nirbharta
3. Fiscal Deficit
Effective control over the fiscal deficit is another great achievement of the Narendra Modi-led NDA government, which recorded an average fiscal deficit of 3.7% of GDP. Undoubtedly, the Modi government controlled the fiscal deficit, but due to COVID-19, the fiscal deficit again touched the hike of 9.2% in 2020–21.
On the other hand, the UPA II government maintained a fiscal deficit of 5.9% of GDP, which also reached 6.6% in 2009–10. But during 2013–14, the UPA began to control the fiscal deficit and brought it to 4.5%.
4. FDI
Foreign direct investment, FDI, is one of the key elements that directly affect the growth of an economy. It represents the investment made by foreign investors in the domestic market, mainly through the stock market and other similar means.
In 2004, when the Manmohan Singh-led UPA government emerged, Dr. Manmohan Singh enforced many policies. He adopted a liberal approach and increased FDI limits to attract foreign investment. As a result, the government increased FDI inflows from $8.1 billion in 2004 to $36 billion in 2013. However, the UPA government had focused on a few sectors like telecom.
The Modi government also adopted a liberal approach and launched many initiatives like the Make in India campaign in 2014 to focus on domestic manufacturing and attract foreign investment.
The NDA II government introduced many policy measures to ensure easy FDI inflows in the domestic market. As a result, the NDA 2.0 government successfully increased the FDI inflow from $36 billion in 2013 to $81.72 billion in 2020.
Furthermore, the Union Finance Minister, Smt. Nirmala Sitharaman, in her recent speech in the general assembly, said there is a $500 billion FDI inflow, which is 65% higher than UPA’s 10 years regime during Modi’s government. She added that there was $81.21 billion in FDI in FY21 and $74.39 billion in FY20.
Related: PM GatiShakti: A Holistic Approach to Tackle India’s Infrastructural Challenges
5. Unemployment
Providing employment opportunities for the youth population was one of the major reasons that helped PM Narendra Modi return to power. However, even after claiming to provide many job opportunities and developing interesting schemes like the Mudra loan scheme, and strengthening MGNREGA, providing jobs has become one of the biggest challenges of the Modi government 2.0.
The average unemployment rate during the NDA government was 6.1%, whereas the highest was 8.4% in 2019–20.
According to Business Standard, the unemployment rate in 2018 was at a 45-year high when a 6.1% employment increase happened due to demonetization. During the pandemic, almost 23 lakh people lost their jobs, whereas thousands of people had to go through pay cuts. And to counter this major problem, the Modi-led NDA government devised many schemes, like the Rozgar Mela.
The Modi government also launched the Startup India campaign to motivate Indian youth to launch their startup and become self-employed.
On the other hand, the unemployment rate during Manmohan Singh’s UPA government was 5.5%. In contrast, the highest rate was 8.3% in 2009–10.
6. Current Account Deficit
During the tenure of the UPA government, the average current account deficit (CAD) was 2.6% of GDP, with the highest record of 5% in 2013.
On the other hand, during Modi’s NDA government tenure, the average CAD has been 0.3% of GDP, with a maximum record of 3.3% in 2022–23. Hence, in terms of gaining better and more stable CAG, Modi’s led NDA government has performed significantly better than the UPA government.
Related: Top 10 Richest States in India
7. Ease of Doing Business
Under the UPA II government, India had an Ease of Doing Business ranking globally at 132 in 2011.
When Modi came into power, he made many structural reforms, such as the Goods & Services Tax and Insolvency and Bankruptcy Code, 2016, that helped India to jump 69 places from 132 and gain the EODB ranking of 63.
It’s one of the appreciable achievements of the Modi government that didn’t only increase the FDI inflows but also the possibilities to generate more employment opportunities in the domestic market.
8. Infrastructure
Modi’s NDA government has performed much better than the UPA government. In 2009, the inclusive length of national highways (NH) was 70,548 km, which increased to 91,287 km by the end of March 2014, increasing to 5.29%.
In contrast, the length of national highways during the Modi government increased to 1,35,676 km by 2019, with a growth rate of 8.25%. Despite national highways, the Modi government has initiated many strategic construction projects across India, especially around border areas.
Conclusion
Dr. Manmohan Singh’s UPA government outperformed in boosting GDP growth and employment rate. In contrast, the Modi-led NDA government performed much better in controlling inflation, FDI inflows, road constructions, infrastructure, and fiscal deficit. The Modi 2.0 government has also focused on Made in India and Startup India campaigns to boost employment and entrepreneurship opportunities nationwide.
References:
