Where does the Indian economy stand today after the seven year rule of Narendra Modi?

  

Narendra Modi, India

As soon as Narendra Modi came to the political arena of India, he created a stir with the help of loud promises like increase in employment, prosperity and elimination of red tape.

Seven years ago today, with the huge mandate given to Narendra Modi's party in the 2014 and then 2019 elections, the people had hoped that he would bring significant reforms in the country.

But his government's economic record in those seven years as prime minister is nothing short of remarkable. And then the Corona virus epidemic further damaged their performance.

With the help of the following charts, we can see where Asia's third largest economic power (India) now stands after seven years of Prime Minister Modi's performance.

The growth rate is slowing down

India does not have as much money as it has to spend. Budget deficit as a percentage of GDP, 2007-2021

Prime Minister Narendra Modi's target for GDP by 2025 was to create an economy of 50 50 trillion, but now it seems like a dream.

Prior to the outbreak, experts estimated that if conditions continued to improve, they could reach a maximum of about 26 trillion, and now that the epidemic is approaching, that estimate is estimated at 200-300 billion dollars. There is a further reduction.

Economist Ajit Ranade says rising oil prices on the world market have pushed up inflation in the country.

But Covid alone is not responsible for this situation.

India's GDP is very low while inflation is very high

Five years ago in 2016, they banned the country's currency, which led to an 86% reduction in the amount of cash used in the country, as well as the introduction of a new tax, which greatly increased the difficulties of the business community.

These decisions created another major problem.

Rising unemployment

Mahesh Vyas, head of the Center for Monitoring the Indian Economy (CMIE), said one of the biggest challenges facing India was the decline in investment since 2011-12.

"And then since 2016, the economy has been hit by a series of shocks, such as currency bans, GST taxes and lockdowns, which have led to rising unemployment."

According to the latest figures, the unemployment rate was the highest in the last 45 years, reaching 6.1 percent in 2017-18. And that rate has now doubled, according to a survey by the CMIE.

Since the beginning of this year, 25 million people have lost their jobs and another 75 million Indians have fallen below the poverty line.

Unemployment is on the rise. Unemployment quarterly growth rate 2016-2021

According to the research institute Pew Research, one third of the victims of poverty belonged to the middle class of India who had improved their economic conditions due to the economic growth in India over the past several decades.

According to Ajit Ranade, the Indian economy needs at least 20 million new jobs a year, but Narendra Modi's government has failed to do so.

In the last decade, India has managed to create only 4.3 million jobs annually.

India's exports are not increasing

One of the major missions of Prime Minister Narendra Modi was to prioritize the promotion of 'Make in India' products and to present India globally as a powerful country with red ribbons. Bureaucratic barriers will be minimized and huge investments will be made to make the country an export hub.

Narendra Modi's goal was to expand the manufacturing sector in the country to 25 per cent of GDP. But after seven years in government, that share has not risen more than 15 percent.

Even worse, research by the Center for Economic Data and Analysis found that in the last five years, the manufacturing sector has lost half of its jobs.

India's exports have not exceeded 300 billion dollars over the past decade.

Bangladesh has become a big competitor in the export sector. Annual growth in exports, percentage 2011-2019

Not only have they not increased, but under Narendra Modi, India is losing market share to regional rivals like Bangladesh.

Bangladesh, which has seen a sharp rise in national growth by focusing on exports, has focused on the country's garment industry.

But on the other hand, Narendra Modi's government has seen an increase in infrastructure construction.

During his tenure, an average of 36 km of roads are being constructed daily, whereas in previous governments, the average was eight to 11 km per day.

Economists also backed a number of public decisions by the Modi government, including building toilets across the country, providing gas and water to the poor at very low rates, and providing housing loans.

But economists are worried about India's rapidly widening fiscal deficit due to rising costs and a lack of tax revenue.

Involvement of people in the formal economy

One of the great things his government has done under Narendra Modi is that it has emerged as a major player in digital payments globally. With the help of his 'Jan-Dhan Scheme', millions of poor families in the country have been able to create bank accounts.

Experts say this is a major step in the right direction.

No spending on health

India has never spent much on healthcare. Percentage of health expenditure in GDP 2014-2021

Economist Ritika Khera says that like previous governments, this government has neglected the health sector.

Experts say the government's priority is on the third-level health situation rather than working at the primary level.

Ritika says that this is an American model which is very expensive and does not improve the overall public health.

A large number of people are still involved in agriculture

In India, more than half of those who have reached the working age are engaged in agriculture, but this sector is not contributing much to the GDP.

In the last few years, there has been no significant increase in farming. Increase in the ratio of gross domestic product to particles 2014-2021

Almost everyone agrees that India's agricultural sector needs reform. Pro-market laws were passed last year, but subsequent protests have not moved the process forward, as farmers say it will reduce their income.

Narendra Modi had promised that the income of farmers would double.

Experts say the reforms will do little more and the government will have to spend more to make the sector more profitable so that it can become more profitable.