are key differences in how the Indian economy has fared during Prime Minister
Narendra Modi’s three years in office and that of his predecessor Dr. Manmohan
Singh. Taking some of these variables like GDP, inflation, etc. the article
tends to draw differences between the same.
There is no doubt at all that demonetization
and the GST rollout have resulted in major disruptions effecting GDP figures.
However, we need to look at both, the UPA and NDA governments to arrive at a
holistic view of the economy. The NDA’s “Make in India” project
launched in 2014 was designed to develop India as a manufacturing hub that
would lead to the creation of jobs for the masses. Manufacturing growth is
linked with industrial production and the UPA inherited an industrial growth of
5.4% that came down to 4.2% when it demited office in 2014. GDP growth in 2004
was 8.2%. This was because of UPA’s strong performance in the manufacturing and
agriculture sectors. The GDP was 6.9% when Modi became prime minister in 2014.
Year-on-year GDP growth was on the rise when Dr Singh assumed office in 2004
but was falling when Modi took over in 2014, inheriting an economy that was
sluggish and stricken by a policy paralysis and corruption.
Modi’s government has been criticized for a
decline in credit growth and private investment. Investments are an important
aspect of the capital formation cycle. It must however, be borne in mind that
most loans that have turned bad were given during the UPA regime. If such loans
were given to politically powerful corporates without properly assessing their
creditworthiness it is a bit rich to hold the NDA govt. responsible for the
consequences that followed. This govt. has acted proactively by making
amendments to the Banking Regulation Act, 1949 and the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest
(Sarfaesi) Act 2002 and the introduction of the Insolvency and Bankruptcy Code.
far as the Modi government’s track record of creating direct jobs go, it does
paint a dismal picture. However, this is on account of factors such as a global
economic slowdown and the disruption caused by demonetization.
was on the rise when Dr Singh demitted office in 2014. When Modi took over in
2014, retail inflation stood at 8.3%. In April 2017, retail inflation had come
down to 2.99%. Exports was one weak sector that Modi will need to correct in
the days ahead if the govt. wishes to keep the trade deficit in check.
rupee was under severe strain during the latter years of Dr Singh’s stewardship
of the economy. However, an encouraging rise in it’s value has been noted.
Economists however are of the opinion that it is a short-term trend.