Nirmala Sitharaman attacks Manmohan Singh's UPA policies, blames ‘leadership problem’

Union finance minister Nirmala Sitharaman speaks in the Lok Sabha during the Budget Session of Parliament on Friday.

Union finance minister Nirmala Sitharaman on Friday continued her attack on the 10-year rule of the Manmohan Singh-led United Progressive Alliance (UPA) government, saying that it suffered from a “leadership problem” as an “extra-constitutional” body – the National Advisory Council (NAC) headed by Congress president Sonia Gandhi — ran the government, which was the reason for India being clubbed in what was known as “Fragile Five” economies.

Speaking in the Lok Sabha on the discussions related to the White Paper that the minister released a day earlier, Sitharaman also contrasted responses during two global crises — saying the UPA-era’s response in the aftermath of the 2008 global financial crisis (GFC) was not as sincere as the NDA government’s handling of the Covid-19 pandemic, which was a more serious situation.

She said the “scandal-ridden 10 years of the UPA regime” saw a series of corruption scandals, including the ₹1.86 lakh crore coal scam, and contrasted it with the Narendra Modi government’s district mineral funds for local area development that she said has mopped up ₹84,900 crore, benefiting states of Jharkhand, Odisha, Karnataka and Chhattisgarh.

The minister also took aim at the former environment minister Jayanthi Natarajan and alleged that the government at the time sought kickbacks to clear environment projects, referring to them as “Jayanthi tax”.

Initiating the debate in the Lower House on the “White Paper on the Indian Economy”, the minister said the previous UPA government committed “scandal after scandal” in their 10 years of rule and left the economy in a sorry state when it exited. “God knows, what would be the condition of this country today if they would have continued,” she said in her opening remarks in the House.

The White Paper – a 60-page document released in the Parliament on Thursday – is a comparison between the Narendra Modi-led NDA government (2014-2024) and the 10-year rule of the UPA regime (2004-14).

Sitharaman said the leadership issue in the UPA regime “was at the heart of the problem” and it is “at the centre of UPA’s scam-driven 10 years, mismanagement and crony capitalism.” Addressing the chair, she said: “Sir, hon’ble Sonia Gandhiji was super prime minister and the chairperson of the National Advisory Council, an extra-constitutional and an unaccountable person.”

Sitharaman said “710 files” were sent to NAC for approval, which was “unconstitutional use of power”.

Former finance minister P Chidambaram of the Congress referred to the White Paper as a “white-lie paper” and a “hatchet job”. “Even the authors will not claim that it is an academic, well-researched or scholarly paper,” Chidambaram said in a statement. He added that no government on assuming office had made as “wild promises as the Narendra Modi government and broken them without an expression of regret”.

The White Paper, the minister said, is prepared with responsibility “so that the records of Lok Sabha and Rajya Sabha have the factual information on the economy” and it would be a “record for posterity” about “the efforts made by a Prime Minister [referring to Modi] to restore India’s glory” from among the fragile five to the top five.

She said the coal scam caused “bhayanak nuksaan” (tremendous loss) to Bharat as it led to cancellation of 204 mining blocks by the Supreme Court. That impacted domestic output, forced India to import coal to produce electricity even though the country has huge coal reserves.

The Modi government conducted coal block auctions transparently for commercial mining as energy is necessary for the world’s fastest growing major economy, she said.

“Aapne koyla ko rakh banaya, hamne aapne nitiyon ke tap se koyle ko heera bana diya (You turned coal into ash, we turned coal into diamonds with the efforts of our policies),” she said, citing the expected record 900 million tonnes of coal production in the current financial year. “In the coming year, it will reach 1 billion tonnes,” she added.

In 2013-14, total coal production was 567 million tonnes, she said adding that enhanced domestic output will save foreign exchange.

“When you don’t put the nation first, when you put your first family first, and when you have other consideration than transparency, the results are out there for you to see. So, what happened after 2008 when there was a global financial crisis and what happened post-Covid shows clearly that if the intent of the government is sincere, results will be good,” the minister said.

In her remarks, Sitharaman also highlighted the poor condition of public sector banks (PSBs) during the UPA government. She also recollected the first major financial scam of independent India in the 1950s by Kolkata-based businessman Haridas Mundhra and the sacking of “honest” State Bank of India (SBI) chairman Raj Kumar Talwar in 1976 for not obliging friends of politicians with loans.

She said the malaise of “phone banking” — alluding to the alleged practice of banks extending loans without due diligence and proper collateral to cronies of the ruling party — was rampant during the UPA regime, which led to a spurt in non-performing assets (NPAs).

“When the Vajpayee-led NDA government took office, the gross Non-Performing Assets (GNPA) ratio in public sector banks was 16%, and when they left office, it was 7.8%. In September 2013, this ratio, including restructured loans, had climbed to 12.3% largely because of political interference by the UPA government in the commercial lending decisions of public sector banks. Worse, even that high percentage of bad debts was an underestimate,” the document said.

Sitharaman said the situation was alarming for the economy as banks were not in a position to give any more loans. “In March 2014, top 200 companies with an interest coverage ratio of less than one owed about ₹8.6 lakh crore to banks,” she said.

Then the Modi government launched a transparent Asset Quality Review (AQR) in 2015 to recognise hidden liabilities of banks that were brushed under the carpet and reformed PSBs through the four “R” strategy — Recognition, Resolution, Recapitalisation and Reform.

Participating in the debate, Congress leader Manish Tewari said the White Paper is a “political manifesto” for the upcoming 2024 General Elections. “If you wanted to bring a White Paper, you should have brought it in 2014. The intention behind this White Paper is only political,” he said. In her concluding remarks, Sitharaman refuted the charge. She said the Modi government did not disclose the precarious state of the economy immediately after assuming power in May 2014 because that would have had a negative impact on the morale of citizens and scared investors away.

Tiwari said the government should recognise the fact that the UPA government brought some transformative reforms such as the Right to Information (RTI), the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the Right to Education, Aadhaar and the National Food Security Act. “I want to ask what is your achievement? If you think demonetisation, or GST [Goods and Services tax], which destroyed small and medium industry, are achievements, I leave it to your wisdom,” he said.

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