MODI GOVERNMENT IN THE LAST DECADE (2014 – 2024)

The 18th Lok Sabha General election in India that was held in seven phases between 19th April 2024 to 1st June 2024 has ultimately witnessed its conclusion. All eyes are on the announcement of the voting result that is due on 4th June 2024. An announcement that will help to build the Indian future during the next term of five years. All the readers browsing through the first few lines of this article may expect discussions on the political front as we move ahead. But to be honest, I have some other plans to pen down as we read through this piece. I am not here to take a side of the ruling political party here rather will try to portray the positives and negatives that the country has seen under Narendra Modi’s reign. Let us all have a glimpse of the ten years of Bhartiya Janta Party (BJP) since the time it has come to power in 2014 and how India has fared in terms of business growth and the opportunities paved in the future.

India has achieved the feat of becoming 5th strongest country in terms of its economy, compared to it being the 11th in 2014. The accelerated pace of economic reforms in the last few years in the domains of fiscal, digital, physical infrastructure and social inclusion, has further positioned India for a higher and sustainable growth. Looking into the growth of the country over the last decade, Indian economy is expected to reach US$ 10 trillion by 2030 and US$ 30 trillion by 2047 owing to the resilient growth that the country has witnessed during the last 3 – 4 years.

One of the major factors that is a concern for a lot of major countries is the control of inflation over the years, especially post the pandemic in 2020. India has observed a lot of to and fro but has been able to put a check in the same over the last two quarters. Consumer Price index (CPI) inflation witnessed a notable decline, easing to around 4.8% in April 2024 with a control over the food and fuel prices. The Central Bank continues to keep a close vigil on the inflationary pressures in the economy even as it expects inflation to further ease during the coming months and has retained the key policy rate at 6.5% in April 2024.

Since 2014, India witnessed certain financial depression in the form of demonetization in 2016 and the pandemic during 2020 that has come up with its multiple phases. Being a country that lacked in terms of well-equipped hospitals and modern facilities, it was contemplated that India might not be able to handle the aftereffect of Covid 19. However, on the contrary it was seen that India has not only been able to handle the consequences of the pandemic but also supplied vaccines to several nations that came as an ultimate remedy. Even during 2016, a lot of people thought the move may bring in a lot of negative consequences, however the move has proved to be a fruitful one. With the demonetisation of all ?500 and ?1,000 banknotes India has witnessed increased Deposits with the Banks, improvement in currency circulation, contouring counterfeit currency, and tracing black money.

The Modi government has initiated unprecedented military modernization. Modernization aims to sharpen synergy within India’s apex defense system comprising of political executives, civilian bureaucrats, and military organizations. The modernization programs have three major goals –

?? Improving defense preparedness in the face of complex national security challenges, enabling India’s military to support its foreign policy

?? Revitalizing defense acquisition policy and procurement procedures, to streamline and rationalize the acquisition and allocation of scarce resources

?? Developing a defense industrial ecosystem, which is necessary to meet any exigencies and sustain India’s global rise

When Narendra Modi took the hot seat, banking system was on the verge of explosion. A significant effort has been spent on fixing the non-performing assets (NPA) that trimmed lending to medium, small, and micro enterprises (MSMEs). ‘China plus one’ strategy adopted by corporates post the pandemic and is witnessed to make a fast progress to address entrenched problems constraining India from becoming a major player in global supply chains. Due to the sustained efforts of the government via “Make in India” plan during 2014-2023, Foreign Direct Investment (FDI) equity inflow in the manufacturing sector increased by 55% to reach ~ US$149 BN compared to US$ 96.0 BN in the previous nine years (2005-2014). Several other measures such as—Production Linked Incentive (PLI) scheme, reforms in tax regimes, liberalization of the Foreign Direct Investment (FDI) policies in manufacturing and setting up of land pools continues to help attract investments. Hence, India remains a bright spot in an otherwise uncertain global set up and the long-term India growth story remains intact. The success of the Jan Dhan Yojana, which has registered over 52.3 Crore first-time bank account holders since 2014. The cumulative graph below shows the number of first-time bank account holders’ year wise.

The service sector has flourished as well, giving a push to the commercial real estate activity as well. The G20 summit in New Delhi in 2023 has clearly marked the importance of India in the global arena. The hospitality sector has boomed over the last five years as the country witnessed several tourists and business tycoons setting up and expanding their office developments and hotel chains. The growth in infrastructure has seen a new upside with the completed and ongoing construction of flyovers, new highways, underpasses, bus stations and airports, helping in decongesting the traffic and ensuring smoother transport within and outside the nation. The traction of data centres with the data centre policy India 2020 by the Ministry of Electronics and Information Technology (MeitY) has played a pivotal role in the growth of Indian real estate sector as well.

A significant milestone has been achieved as the Goods and Services Tax (GST), the most substantial tax overhaul, was launched within the confines of the Central Hall of Parliament. The implementation of GST eliminated the inefficiencies and complexities inherent in the outdated taxation system, contributing to an acceleration of economic growth. It has widened the tax base in India, increased tax-registered businesses, and brought certain unorganized sectors under the tax net. Goods & Service Tax has also contributed to the overall ease of doing business in India and simplified taxpayer compliance to a massive extent. The transparent nature of the tax system, with the digitization of processes and electronic records, helps in curbing tax evasion and increasing transparency. Additionally, GST has made business processes more efficient than ever by simplifying the tax structure. The highest-ever monthly GST collection was recorded in April 2024 at INR 2.1 lakh crores.

While writing about all the positives and the future plans that the current prime minister ha chalked out and the bold statistics shining our mind with the perception that India is going to see the “Achhe Din” soon there are certain aspects that may hinder the perception of India’s supposed economic miracle. Modi’s second term has actually seen the lowest period of GDP growth since India liberalized its markets in the early 1990s. Per capita income over the past 10 years grew half as fast as the decade under Modi’s predecessor Manmohan Singh of the opposition Congress Party, while stock market returns are lower than in the previous decade. Foreign direct investment (FDI) is plunging. FDI levels are now the lowest in nearly two decades. Even local investors are shying away from opening their wallets. Private capital expenditure remains low. Private sector investment has in fact been falling as a proportion of GDP since 2012 and the economy is now largely driven by huge government investment.

The consumer goods market continues to be sluggish, with people cutting down on staples—emblematic of economic stress. Private consumption growth is the slowest in the last 20 years, setting aside the pandemic low. Tractor sales, a proxy for the economic health of villages (where 70% of Indians live), have fallen steeply. Banks are battling the worst deposit crunch in two decades as household savings are at a 47-year low while household debt levels are at a record high. Unemployment is also endemic. The share of young people with secondary or higher education among unemployed youth has almost doubled in 20 years.

Addressing an election rally in Mumbai about a week ago, he announced that the blueprint for the first 100 days of his third term is ready. He stated that his 100-day plan, comprising of 50 to 70 goals under three different categories would begin promptly after June 4 to avoid any delays in decision-making. Category A goals are those of the utmost priority and are expected to be declared by the Prime Minister nearly as soon as he enters office. In contrast, Category B targets will be announced by Union ministers and Ministers of State within the first few days. The Category C targets are more long-term in character, with a rollout planned for the next 2-3 years. These goals mostly cover the sectors under manufacturing, New – age tech, Infrastructure and Clean Energy.

One must keep in mind that the look into certain departments may lack certain attention in few of the other departments. With a bit more time and planning in hand, Modi government may bring in more wonders to the country and can fill in the potholes in the departments that lacked attention and planning in the last few years. It is though evident that the GDP has been on the comparatively lower side, but we cannot deny the large effect that the pandemic has brought in the country’s economy. The recent growth certainly instils a confidence that India may now have the ability to go ahead unless any other disruptions fell in the path of this robust growth. Let us wait for few more hours now and we will know if Modi 3.0 government is going to get formed. Fingers crossed!!