If one leaves out that brief inter-regnum in 1996, there have been four governments since 1991?Congress (1991-96), UF (1996-98), NDA or BJP-led (1998-2004) and UPA (2004 onwards). With the UPA completing four years, it?s legitimate to ask questions about its economic track record. The UF wasn?t important enough. But how does the Congress contrast with the BJP? At one level, one can mention NHDP, telecom and initiation of VAT as reform initiatives under BJP, with many claimants for non-reform. One can mention the Right to Information Act and conclusion of VAT as reform initiatives under the Congress, with many more claimants for non-reform, including rural employment guarantee, debt relief for farmers and 6th Pay Commission. However, these are initiatives or inputs. What about outcomes? Any self-respecting economist should shudder at the thought of correlating outcomes with a specific Central government, complicated by the phenomenon of time-lags and the role of State governments. With that caveat, let?s speculate on outcomes. The Narasimha Rao Congress government delivered average real GDP growth of around 5.7% (1991-92 has to be included), the BJP delivered 5.9% (we often forget 2002-03) and UPA has so far delivered 8.8%. The Congress has apparently done better than the BJP on growth.

The only problem with that argument is the structural break from 2003-04 and the plausible contention that this higher growth trajectory was a fallout of lower real interest rates and better road connectivity, both legacies of NDA. In the apple-to-apple comparison, the BJP does better than Congress on growth, but only marginally. Let?s move on to the savings rate, as percentage of GDP. The average savings rate was 22.7% during the Rao years, 25.1% during the BJP?s term and 33.6% in UPA?s time. Beyond the continued increase in the savings rate, we don?t seem to have much. However, when savings is broken up into contributions from the household sector, the private corporate sector and the public sector and much of the recent increase in savings has been driven by the private corporate sector. The average household savings rate was 16.8% with Rao?s Congress, 21.9% with BJP and 23.7% with UPA. The continued increase in the household savings rate is obvious enough, but one can probably tease out a little bit more, since growth in the household savings rate didn?t occur at the same rate under UPA. At this speculative level, household consumption seems higher under Congress and household savings higher under BJP. Indeed, if one takes real figures and nets out inflation, household financial savings seem higher under BJP.

Private investment (capital formation) was 13.9% of GDP under the Rao?s Congress, 17.0% under the BJP and 23.7% under UPA. Like GDP growth, there was a sharp break in 2003-04 for both overall investment and private investment. If one ignores the period since 2003-04 because of that reason, there emerges an interesting and provocative proposition.

Household consumption is higher under Congress and private investment is higher under BJP. And to restate what is sufficiently well known, nominal deposit and lending rates have been higher under Congress than under BJP, a proposition that becomes stronger if one factors in a time lag of a year or so. It shouldn?t therefore be surprising that private investment is higher under BJP. Yet another proposition is sufficiently well known. Regardless of which indicator one uses, inflation (since 1991) has been higher under Congress than BJP, despite high primary article/food inflation in 1998-99. Real, not just nominal, interest rates have also been higher under Congress than BJP.

Consider yet another indicator. The average value of the Sensex was 1880 in 1991-92. In 1996-97, it went up to 3469, 1.8 times more. In 1998-99, the average value of the Sensex was 3295. In 2004-05, it went up to 5741, 1.7 times more. In 2006-07, two years down the line, the average value of the Sensex was 12277, 2.1 times more. The Sensex depends on many factors and the possible structural break in 2003-04 has already been mentioned. Nor is the Sensex an appropriate indicator of the entire capital market. Nevertheless, the stock market seems to perform better under Congress.

There is a danger of this entire line of reasoning being dismissed as na?ve, speculative and too sweeping. So one should restate it in terms people find more acceptable. First, there can?t be any dispute that Congress choked off that earlier growth spurt preceding 1996-97 by hiking interest rates or that interest rates have increased continuously since May 2004. Second, the UF may have implemented 5th Pay Commission, but its origins go back to the Rao Congress and UPA will unleash 6th Pay Commission. Third, if infrastructure spending is now more than 5% of GDP, that?s almost entirely because of roads (with Pradhan Mantri Gram Sadak Yojana added to NHDP).

It seems, then, that both the Congress and the BJP have their comparative strengths in boosting different spheres of the economy. But at least there is a common strength in keeping growth rates consistently high. That?s good for India.

?The author is a noted economist