Evaluating Modi's Economic Vision: Has India Achieved Growth or Missed Opportunities?

It’s nearly been a decade since Narendra Modi assumed office in the Indian administration and sought a third term in the 2024 general election. The party came to power in 2014 with a majority of votes in the election polls. In 2016, India became the fastest-growing economy, leaving behind China. Until 2016, India's GDP rate growth has been steady, achieving more than 7% for every quarter. Since mid-2016, economic growth started to decline, and in 2019, India’s economic growth fell to 4.5 percent.

After the government introduced certain policies such as demonetization of 500 and 1000 and goods and services tax, COVID lockdown, which severely impacted its economic growth,.

There is a continuous debate about economic growth under the Modi administration. Even senior party figures like economist and former minister Arun Shourie have criticized the government, labeling falsehood as a defining trait. This raises significant doubts about the economic performance under Modi's administration.

Let's analyze the economic progress achieved during the tenure of the Modi administration over the past decade.

Transformative reforms under the administration of Narendra Modi 

Implementation of GST 

The introduction of GST significantly impacted the Indian economy by creating a unified tax system, abolishing various forms of tax duty like excise, service tax, VAT, CST, etc., and merging them into one GST. It also facilitated smoother movement of goods and services across border states, reducing interstate trade barriers, which promoted exporting and importing as an integrated national market. It boosts the Indian economy by allocating resources efficiently,resolving complex indirect tax systems, and reducing the protocols for (MSME) micro, small, and medium enterprises. 

The implementation of enhanced trade efficiencies, similar to the establishment of the Euro, along with reforms in bankruptcy regulations, led to a significant enhancement in the management of corporate and banking sector balance sheets, as well as an improvement in governance.

The GST growth rate continued to show positive trends post-implementation in July 2017, and as GST rates settled and businesses adjusted to the new tax regime, the trend continued. Despite fluctuations, the GDP exhibited positive growth rates post-GST implementation, showcasing the positive impact of GST on the Indian economy.

Demonetisation 

Cash is the most preferred mode of transaction globally; over 95% of people use money for its easy accessibility, purchasing, and selling of commodities. Some of the developed countries use cash transactions less than 50%. The only problem with cash transactions is the anonymity and difficulty of establishing an expenditure trail, which make it an ideal mode for unreported transactions as well. 

The introduction of demonetization aimed to eradicate black money in India. However, the sudden removal of Rs 500 and Rs 1000 notes by Mr. Narendra Modi overnight caused widespread inconvenience, with the entire population having to endure long hours of waiting in front of banks.

The ratio of currency to GDP (gross domestic product) in India, which averaged 8.4% during 1975-2000, crossed 10% for the first time in 2002-03 and has remained above this level since then. This ratio has averaged 10.8% in the last decade. There has not only been a relatively sharp increase in the ratio of currency to GDP during 2015-16 .but a reversal of the negative trend witnessed in the previous three years. The increase in this ratio could have persisted through the current year as well before the demonetisation of higher denomination notes announced on 8 November.

3. Make in India 

Make in India is a program launched by the Indian government in 2014 with the aim of boosting manufacturing. It aims to attract foreign investors to set up their company in India and create jobs among Indian youngsters. These schemes target the industries of manufacturing, IT, automobiles, textiles and garments, and much more. 

Yet, unemployment peaked when COVID hit in 2020. When layoffs happen, many undergraduates struggle to find the right job. Nearly 25 million people have lost their jobs since the start of 2021. And more than 75 million Indians have plunged back into poverty, including a third of India's 100 million-strong middle class, setting back half a decade of gains, according to estimates by Pew Research.

Here is a summary of inflation rates and poverty trends in India from 2016 to 2023:

Year	Inflation Rate (%)	Poverty Rate (%)
2016	4.5	21.9
2017	3.6	21.2
2018	3.4	20.7
2019	4.7	19.7
2020	6.2	21.9
2021	5.8	20.0
2022	5.5 (estimated)	19.5 (estimated)