It has been two years since the Narendra Modi government has been at the helm of affairs in India. It took over at a time when the global economy was hit badly, but now India is miraculously showing signs of revival.
Today the country has grown from being a vulnerable member of the emerging market (EM) in May 2013 to the new poster boy of EMs in May 2016.
Modi may or may not be directly responsible for earning these kudos for the country but he is today one of the most popular politicians in India where a large number of his ilk are jostling for space and identity. Is the Modi popularity really based on his now famous charm offensive or the real movement on ground of his numerous polices that he had come forth over the years and some of which have fructified? One cannot separate the two, however.
Policy paralysis and the pall of gloom that hung over the economy have lifted and the government is presumably pushing the new government’s policies with vigor and zeal.
The new government deserves lots of credit for its achievements over the last two years but much more remains to be done. The key is not to panic if growth temporarily slows. Global potential growth has been on a secular decline since the Lehman crisis, and has pulled down India’s potential growth with it. Reversing this through important but politically-sensitive supply side reforms will take time and it is then that the real “Ache Din” (good days) should descend.
Coming back to Modi’s two years– without boasting he has spearheaded many initiatives—the list is quite long– Swachh Bharat (clean India), Make in India, Digital India, Skill India, Start Up India, Beti Bachao Beti Padhao (save girl child, teach girl child), Mudra Bank, or financial inclusion and social security measures. In a recent interview to Wall Street the prime minister did not mince any words: ‘’I have actually undertaken the maximum reforms.’’
This is despite many obstructionist tactics by the opposition parties led by the Congress.
It is also true that some of these initiatives, inherited from the previous government were rebranded and re-launched with greater political commitment and visibility. According to the World Economic Situation and Prospects Report, a UN organization recently noted that India’s economy was slowly gaining momentum, with the GDP expected to grow at 7.3 percent in 2016 and 7.5 percent the following year.
Foreign direct investment (FDI) has increased by 48 percent, while manufacturing growth picked up from 1.7 percent in June 2014 to 12.6 percent in 2016.
Inflation is under control while foreign exchange reserves have touched a record high of US$363.12 billion.
Similarly, the FDI inflows recorded a new peak of US$51.64 billion during the first 11 months of 2015-2016.
On the foreign policy front the prime minister established a personal rapport with world leaders such as US President Barack Obama and Japanese premier Shinzo Abe.
In the all-important infrastructure sector the government road construction has risen from 8.5 km a day to 11.9 km a day in 2014-2015 and to 16.5 km in 2015-2016. Similarly, the construction of national highways went up from 3,500 km in 2013-2014 to 10,000 km in 2015-2016.
Rural infrastructure has also witnessed the laying of 35,000 km of rural roads in 2014-2015, which is 11,000 km more than previous year. Allocation to MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) has been increased substantially to 380 billion rupees and the guidelines were modified to ensure that the money was utilized to build durable assets in rural areas.
The government executed the transparent auctioning of 74 coal blocks, which will make the coal-bearing states richer by 3,440 billion rupees over the lifetime of the mines. A transparent telecom spectrum auction fetched the exchequer 1,100 billion rupees too.
Following the PM’s call to electrify 18,452 un-electrified villages within 1,000 days, as many as 7,343 have already been electrified.
The Pradhan Mantri Jan Dhan Yojana (Prime Minister’s People Money Scheme) has led to the opening of 215.6 million accounts, while a stupendous number of 94.1 million policies were taken under the Pradhan Mantri Suraksha Bima Yojana (Prime Minister’s Accident Insurance Scheme) in India. Under the unique MUDRA (Micro Units Development and Refinance Agency Bank) Yojana (project), which seeks to provide loans to micro and small enterprises, a sum of 1,250 billion rupees was disbursed and 330,000 people got loans.
Even the productivity of parliament increased. Important reform legislation were passed including the Insurance Laws (Amendment) Bill, the Companies (Amendment) Bill, the Labour Laws (Amendment) Bill, the Coal Mines (Special Provisions) Bill, the Mines and Minerals (Development and Regulation) Amendment Bill, the Real Estate (Regulation and Development) Bill, the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, the Insolvency and Bankruptcy Code and the Anti-Hijacking Bill.
The Modi government is bullish and confident that it would roll out the single Goods and Services Tax (GST) by April 1,2017. The main function of the GST is to transform India into a uniform market by breaking the current fiscal barrier between states. Thus the GST will facilitate a uniform tax levied on goods and services across the country.
Finally, the government led by Modi has to increasingly rally people around its schemes and must drive home the point that it is they who would be the ultimate beneficiaries and not the political class who are merely implementers of the government’s policies.