The first three years of Dr Manmohan Singh as Prime Minister saw India posting its highest GDP growth ever, averaging 9% a year. Narendra Modi’s government tweaked the GDP calculation by an estimated 2%.
What’s more, the only major breakthrough in Prime Minister Modi’s first three years is the consensus on the Goods and Services Tax (GST), something which he and the Bharatiya Janata Party (BJP) had opposed when in opposition. They had also opposed Aadhaar and Direct Benefit Transfer, on both of which the BJP and Modi have made a U-turn.
Modi is yet to act on the massive Non-Performing Assets (NPA) accumulated by public sector banks. As commentator and public policy analyst Mohan Guruswamy said, “Modi did the Gold Bond scheme, but his bureaucrats did not allow it to succeed by loading it with too many conditions and required revelations . He didn’t free the Public Sector Undertakings (PSUs) from the joint secretaries and didn’t reform the PSU banks. He has not reformed the oil sector. He did no good tweaks. No game changers so far. It’s still the same old game.”
And despite the positive spin on demonetisation, it remains a disastrous policy which Guruswamy describes as “financial vandalism”. Neither has black money been reduced, nor has terrorism abated. Counterfeit money has resurfaced and demonetisation has basically changed nothing, besides robbing a few million daily wage earners of their livelihood.
It has, of course, brought 9.1 million new taxpayers which may bring in more revenue, but will not bring about any substantial change as the Modi Government promoted that it would.
Though there are certain positive trends in the economy, they are marred by the following negative traits:
Slow pick up in capital spending has been a big drag on the market. Deustche Bank in a research note said that despite the government’s attempts to raise public spending “within the confines of conscious fiscal discipline”, investment formation has remained anaemic.
The government has failed to earn a rating upgrade for the economy. Chief Economic Advisor (CEA) Arvind Subramanian has many a time slammed rating agencies and questioned their rating methodology, but India’s rating remains just above average.
While the government has initiated many steps to ease the difficulties one faces in setting up of a business in India, the ranking has not improved much. As per the World Bank, India stood at 130th slot on ease of doing business, 155th at starting business, 185th in dealing with construction permits, 138th in registering property, 166th in enforcing contracts and 108th in trading across border. The ranking was benchmarked to June 2016.
In jobs creation, Modi had promised to create 2 crore jobs every year. By that token, six crore jobs should have been created by now. But, despite launching fancy schemes like ‘Make in India’ and ‘Skill India’, results are not visible yet. Since 2009, the number of jobs created every year has actually reduced. From December 2009 to December 2010, 870 thousand new jobs were created, but the number went down to 135 thousand in April to December 2016. Yet, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) wages were increased by a ridiculous amount of ₹1 in several states.
In agriculture, manufacturing and services sectors, India continues to plod with no sector taking off. The big push on irrigation too has not happened. In Maharashtra alone, 639 farmers are said to have committed suicide in the first four months of 2017.
Almost the whole of South India is facing drought-like conditions and it does not look like farmers will get any breather anytime soon. The farmers from Tamil Nadu staged a protest for nearly a month in Delhi demanding a ₹40,000-crore drought-relief package, farm loan waivers and setting up of the Cauvery Management Board by the Centre. Tamil Nadu Chief Minister Edapaddi Palaniswami did give them some assurances and the farmers gave the government time till May 25. But the issue has not been resolved yet.