India: the UPA's unsustainable growth spurt

In 2015, the Government of India adopted a new GDP calculation method with the base year of 2011-12.  (Resetting the baseline year is a routine matter.)   The new method was more comprehensive in the data it used.  Nevertheless, the new series provoked a lot of suspicion especially because the old GDP numbers were not restated in terms of the new series.



Well, finally MoSPI has come up with provisional estimates of what the new GDP series would look like in the past years.  And now the opponents of the government are crowing that it was them that delivered double-digit economic growth.

Well, it was always true that the UPA government delivered some years of high growth for the Indian economy, no matter which GDP series you use.  The question to me always has been - was that growth sustainable?  I believe not.  These charts from tradingeconomics.com illustrate the issue. The high growth years were also years of unsustainable deficits.

PS: I have not even touched upon the bad bank loans given out during UPA-2 that continue to be a problem today (bank NPAs - Non-Performing Assets). e.g. The Economic Times, July 2014 (....the four-fold rise in bad loans over the past two years, mainly of public sector banks...)

Note that the y-axis does not always start at 0%.


Central Government Budget Deficit as a percent of GDP

Government expenditure as a percent of GDP

Current Account Deficit as a percent of GDP