Numbers can often be strung together to tell a story. But when each number has a story of its own, it is best to let them do their own talking: a reading of how the economy may play out in the fifth year of the Narendra Modi government.
Most governments get into election mode in the last year of its term. Narendra Modi’s government is different. The current dispensation has remained almost permanently in election mode, with the Prime Minister personally being involved in many state elections, with BJP often fighting these in Modi’s name, often without declaring a chief ministerial candidate.
Therefore, electoral signals have been spread out across the last four years of the government and mixed with economic reforms. The fifth year is not expected to be any different. No one really expects the government to be cautious either and expects it to pull out a few more rabbits out of the bag this year, too.
The key fact that has the government enthused is that India is one of the fastest growing economies of the world, and is likely to emerge as the fifth largest. The economy is expected to double in seven years. This is a good proposition for any government to work with, be it in its last year or the first.
6 Big Changes That Defined 4 Years of Modi:
Demonetisation
On November 8, 2016, the government announced that Rs 500 and Rs 1,000 currency notes in circulation would be withdrawn and new Rs 500 and Rs 2,000 notes were issued. The move was reportedly aimed at targeting black money, though that narrative did change over the course of the year. The move sent shockwaves across the economy. Economic growth was subdued and several small businesses were shut. Some still argue that the economy is yet to recuperate from that shock. The currency in circulation has now steadily grown, and the government is pumping in new currency notes Currency with public on May 11, 2018 Rs 18,578 billion Currency with public on October 17, 2016 (before note ban) Rs 17,564 billion.
Unified Tax
India has been looking at a unified goods and services tax (GST) regime for almost two decades. The Modi government took it upon itself to push through the indirect taxes reform. The GST has more tax slabs that envisioned and has been revised multiple times. The small and medium businesses have complained that compliance has gone up while margins have come down. Teething troubles are still being ironed out.
Ease of Doing Business
One of the key parameters that the government wanted to improve was ease of doing business. Modi had made it clear that India’s ranking on the World Bank chart should improve. After slipping briefly, India managed to go up 30 places in the 2018 rankings.
Thinking Out of the Box
This government has tried to radically change how governance works in India. A look at some of those moves:
Demonetisation and GST are among the most radical moves.
The Budget date was changed to February 1. The advancement from the last day of the month was to ensure departments get more time to spend the money allocated to them.
The Railway Budget, an annual event of great political opportunism, was done away with. The portfolio was used as a bargaining chip in coalition politics.
Planning Commission was replaced with NITI Aayog - Conflicting ministries were brought under one minister like steel and mines or coal and power.
Process started for privatisation of Air India - The insolvency and bankruptcy code implemented in 2016 laid out the rules for a court-monitored time-bound process of dealing with bad loans. This has led to Rs 4 lakh crore worth of recoveries.
Expanding Political Base
Politically, BJP has expanded its footprint across India during the past four years. It had a government in seven states in May 2014 — the Modi government was sworn in on May 26. Today, it either heads the government or is part of the ruling coalition in 22 states. Major electoral gains include Maharashtra, Haryana, Uttar Pradesh, Assam and Tripura. It also emerged as the single largest party in the recent Karnataka polls but fell short of getting the numbers to form a government.
Source: EconomicTimes
Most governments get into election mode in the last year of its term. Narendra Modi’s government is different. The current dispensation has remained almost permanently in election mode, with the Prime Minister personally being involved in many state elections, with BJP often fighting these in Modi’s name, often without declaring a chief ministerial candidate.
Therefore, electoral signals have been spread out across the last four years of the government and mixed with economic reforms. The fifth year is not expected to be any different. No one really expects the government to be cautious either and expects it to pull out a few more rabbits out of the bag this year, too.
The key fact that has the government enthused is that India is one of the fastest growing economies of the world, and is likely to emerge as the fifth largest. The economy is expected to double in seven years. This is a good proposition for any government to work with, be it in its last year or the first.
6 Big Changes That Defined 4 Years of Modi:
Demonetisation
On November 8, 2016, the government announced that Rs 500 and Rs 1,000 currency notes in circulation would be withdrawn and new Rs 500 and Rs 2,000 notes were issued. The move was reportedly aimed at targeting black money, though that narrative did change over the course of the year. The move sent shockwaves across the economy. Economic growth was subdued and several small businesses were shut. Some still argue that the economy is yet to recuperate from that shock. The currency in circulation has now steadily grown, and the government is pumping in new currency notes Currency with public on May 11, 2018 Rs 18,578 billion Currency with public on October 17, 2016 (before note ban) Rs 17,564 billion.
Unified Tax
India has been looking at a unified goods and services tax (GST) regime for almost two decades. The Modi government took it upon itself to push through the indirect taxes reform. The GST has more tax slabs that envisioned and has been revised multiple times. The small and medium businesses have complained that compliance has gone up while margins have come down. Teething troubles are still being ironed out.
Ease of Doing Business
One of the key parameters that the government wanted to improve was ease of doing business. Modi had made it clear that India’s ranking on the World Bank chart should improve. After slipping briefly, India managed to go up 30 places in the 2018 rankings.
Thinking Out of the Box
This government has tried to radically change how governance works in India. A look at some of those moves:
Demonetisation and GST are among the most radical moves.
The Budget date was changed to February 1. The advancement from the last day of the month was to ensure departments get more time to spend the money allocated to them.
The Railway Budget, an annual event of great political opportunism, was done away with. The portfolio was used as a bargaining chip in coalition politics.
Planning Commission was replaced with NITI Aayog - Conflicting ministries were brought under one minister like steel and mines or coal and power.
Process started for privatisation of Air India - The insolvency and bankruptcy code implemented in 2016 laid out the rules for a court-monitored time-bound process of dealing with bad loans. This has led to Rs 4 lakh crore worth of recoveries.
Expanding Political Base
Politically, BJP has expanded its footprint across India during the past four years. It had a government in seven states in May 2014 — the Modi government was sworn in on May 26. Today, it either heads the government or is part of the ruling coalition in 22 states. Major electoral gains include Maharashtra, Haryana, Uttar Pradesh, Assam and Tripura. It also emerged as the single largest party in the recent Karnataka polls but fell short of getting the numbers to form a government.
Source: EconomicTimes
