The prime minister?s office will cite a 14% rise in per capita income in the country in 2011-12 and a considerable reduction in food inflation as a success story in the UPA government’s report card to be unveiled on Tuesday. The government, which completes three years in office in its second term amidst concerns over the falling growth and depreciating rupee, will also highlight the record power sector output of 20,000 MW in 2011-12 and the spike in social sector spending and grants to states, a PMO source said.
The government, which is expecting to face hard questions over its governance, would also highlight the ten percentage point reduction in food inflation achieved during the year. This has substantially reduced pressure on consumers who otherwise were facing a double whammy of a high food prices and low growth.
The worry over inflation is however hardly over. Headline inflation continues to remain high depite a series of rate hikes by the RBI. The wholesale price based inflation rose to a higher than expected 7.23% in April.
Food inflation which touched a ten-year high of 20% in December-January 2010, came down to about 9.94% in March. It has surged to 10.49% in April.
On the positive side, the Congress-led government would also seek to take credit for the R30,000 crore increase in social spending programmes in 2011-12, and an equivalent rise in the grant to the states. It will also point out 20,000 Mega Watt capacity addition in the power sector in 2011-12 alone, almost equal to the total capacity added during the tenth plan.
A slump in the manufacturing sector, hefty spending and slow expansion in revenue collections spoilt government’s budget in the last year. The fiscal deficit jumped to a high of 5.9% in 2011-12, from the budgeted level of 4.6%. The government’s could not push through stake sale in PSU companies aggressively.
Trinamool Congress, the UPA key ally, have put paid to implementing decisions like FDI in multi-brand retail or the setting up of the National Counter Terrorism Centre (NCTC).
The state has also been demanding a debt waiver on its loans from the Centre. The upcoming presidential election would be another challenge for the UPA, especially since the regional parties are hooting for their own candidates.
Key reform bills in the banking, pension, taxation and land acquisition areas are still stuck.
The rupee has depreciated sharply even as the current account deficit ballooned. Rating agency Standard & Poor’s have recenly cut India’s sovereign credit outlook to negative from stable, and said there was one-in-three chance of a downgrade of the country’s investment rating to the junk category.