There are two definite messages in this RBI / Telegraph chart.
1. India has forever been in the deficit but quite extraordinarily India had trade surpluses for about three years. Only three years since 1981 to present.
What was different in those three years? It was rule of Vajpayee government which took over at the crossroads from the prosperous-90s to shattering dotcom bust. It was the period of biggest wealth destruction in stock markets, and that of Kargil war.
If you look back, the government especially the Finance Ministry was very disciplined. Despite announcing mega projects like Golden quadrilateral and Swarna Ganga, and financing the war and military buildup on the borders, all the time of the devastating downturn in IT, tourism, airlines and associated industries; the last acknowledge global recession - the government did very well.
2, The second fact that is striking is that sometime in 2006 - 2007, government totally lost control of its trade balances.
It seems like the much vaunted Indian middle class and its fed "consumerism" finally kicked in with demand that rocketed the imports while the exports just managed to go no where.
Argument:
It can be said that Vajpayee government was riding on the progress made by the 'liberalization' and much lower deficits in late 90s. [Note: This hankering on the historical tendency seems to be the favorite argument of Congress', as in case of Gujarat] That's true, no data on the linear timescale is independent. At the same time I am sure Congress will find it tough why a decade of progress could not help them maintain the number, let along grow upon it. And worse, they lost the control so much the deficit has spiraled to never seen before levels.
Conclusion:
The point of the post is not to look at the deficits and post-mortem them. Thats of no use. What is however, is of use is in understanding the DNA of BJP and Congress' fiscal management.
Congress is purely socialistic and populist, buying votes in the names of welfare schemes, and almost always interminably boringly name after Mahatma Gandhi or Nehru or Indira or Rajiv Gandhi. Congress does not have a vision, they still hark on the vision set for them by Rajiv Gandhi more than 25 years earlier. Congress has no vision for the development. They have no "dream." They have showed no sense of urgency to get a new leader, or work on a new vision or work on the economy to leave behind a good legacy. They live for the present, for the instant-gratification, even it means doling out exchequer funds into the black-holes of populism, which are but a veneer for frauds and corruption.
In essence, the Congress' political philosophy revolves around giving people out of the exchequer in return of votes. Their only policy is to hold on to power, irrespecitve of the health of the country, states or people.
BJP on the other hand seems to handle the responsibility of power much better. The DNA of that responsible management under Vajpayee, let us hope was not a one time fluke. Going by the achievements of the BJP Chief Ministers and BJP governed states, it makes much more convincing case that this responsible and disciplined fiscal management, was part of the party's DNA.
Though BJP hasn't had much years to rule and their history is limited, the impact of that history is sterling. In other words, even though Vajpayee had just few years to rule, the impact of his rule can still be felt in all the rural areas, be it in the form of roads, health or education. And these impact are far more permanent impact on life than a fleeting "subsidy" or "reservation" that other parties aim at.
India would have been a much better place if BJP had come to power in 2004 or 09, but here it is hoping they do come to power in 2014.
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