Indian Economy –
Before and After 9 Years of Modi
In June 2023, after nine years of Modi’s government, the state of Indian economy is poised for an interesting future. However Modi’s reign should not be viewed in isolation. It is only a continuation of a journey since 1951, with a very special gear in 1991.
India almost wasted its first four decades in the race of rapid growth. However to be fair, in four decades since 1951, India had embarked on a full fledged planned economy. The first few plans focused on
strengthening of the manufacturing and industrial sector and agriculture, to form the backbone of the Indian economy.
A revolutionary change due to a crisis was brought by the able leadership of PV Narasimha Rao, helped by his outstanding finance minister, Dr Manmohan Singh. In 1991, India saw itself battling its most critical economic and currency crisis ever, but after
economic reforms and adopting the policy of Liberalisation, Privatisation and Globalisation, Indian economy found a trajectory of rapid growth. Under many governments in 90s, and during UPA and Modi’s time, the growth has continued. India’s gross domestic product (GDP), adjusted for inflation, increased from $266 billion in 1991 to $3.7 trillion in 2023. India is the fourth largest share market in the world. By 2028 India will be the third largest economy in the world.
In this century, there were many hiccups in the path of growth. The second tenure of UPA was marked by policy paralysis slowing the growth. In Modi’s time misadventure of demonetisation, teething troubles in introducing GST, COVID-19 pandemic and Russia-Ukraine war created big hurdles. The country has overcome those difficulties. The introduction of GST has stabilised and given a push to taxation. In April 2023, the GST collection was Rs 1.87 lakh crore. The GDP growth in 2022–23 surprised everyone with 7.2%. The forecasts for the present fiscal have been amended upward from Moody’s earlier 4.8% to 6.5%.
Modi fervently continued the path of reforms. A remarkable achievement has been the adoption of digital technology in all aspects. Introduction and use of Aadhaar on a massive scale and use of UPI, opening of 48 crore Jandhan bank accounts and the system of Direct Benefit Transfer has seen an efficiency in Indian financial management never imagined before. Insolvency and Bankruptcy Code has helped PSUs to restore their financial health. Make in India with the help of Profit Linked Incentive is changing the manufacturing sector.
Now India is about to produce its own semiconductors and Apple has opened its production. At long last India has started manufacturing quality defence equipments. The most remarkable contribution of Modi government has been its sizeable push to infrastructure. India is building many Expressways, airports and houses and latrines for common man. There is rapid growth of railways and road network.
India is now spending about Rs 10 lakhs crore this year on infrastructure and we will see many Sea-Links in places like Mumbai. At the same time Modi tried for labour reforms with only limited success. Modi politically failed to introduce Agricultural reforms. Overall Modi has made a very strong base for India to jump in future. Which ever government comes in future, it will be benefited by these reforms and infrastructure for rapid development.
India is seeing rise of many start-ups and billionaires. Some rich are getting richer and money is getting concentrated in the hands of a few tycoons. But poor are not getting poorer. Under a massive scheme, unknown in scale in the world, India is feeding its 80 crore people free of cost for the last three years. Per capita income of the poorest section is also rising, though incrementally.
Coming two decades will be fateful in the world history. Shortly, China will start slowing while India will have its full potential to bloom into reality.
