A look back at 4 years of Modi raj

Four years ago, in the biggest election of India’s history, Narendra Modi the three-term chief minister of Gujarat stormed to power with a thumping majority for his vision for a developed India. Not for 30 years had a single party won an electoral majority. Modi's success, his rhetoric and his background all seemed like a decisive break with India's past -- one which many Indians were eager to embrace.

Modi government unleashed the biggest tax reform, revamped a century-old bankruptcy law, revived stalled projects and got the World Bank to say Asia’s third biggest economy is a much better place to do business.

During these four years, the Modi government introduced a number of reforms including Swachch Bharat project, Demonetisation, implementation of Goods and Services tax (GST), Ujjwala Yojna, among others. Even the rating agency Moody’s upgraded India’s sovereign rating after the gap of 14 years long years. Recently, the government has also said that is has connected all villages in the country with electricity. 

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 likely 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. 

Here’s a look at how the economy has fared under Modi and other big changes that defined four years of Modi government.

According to reports India’s economy was growing at higher pace after Modi changed the way GDP was calculated. However, unexpected cash crack down in November 2016 eroded those. But now, growth is showing signs of revival, shrugging off the impact of demonetisation and GST. As Modi enters his final year in office, India is poised to replace China as the world’s fastest growing economy.

As far as fiscal deficit is concerned, the glide path on the fiscal deficit helped Modi bring it down to a 10-year low and win a rating upgrade from Moody’s Investors Service. Crude oil prices helped keep the government’s finances in check in the initial years. However, it could now play spoilsport. India’s budget deficit is still one of the widest in Asia and Modi’s challenge is to narrow it further amid pressures to boost spending ahead of national polls in 2019.

The big changes introduced during these four years included demonetisation. The government on November 8, 2018 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 idea was to target 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. However, the currency in circulation has now significantly improved, and the government is pumping in new currency notes.

The other major change was unified tax. India has been looking at a unified goods and services tax regime for almost two decades. The BJP-led NDA 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. Teething troubles are still being ironed out. 

The introduction of Real Estate (Regulation & Development) Act, or RERA, has been another great move, at the central government level. But state governments have been lackadaisical in implementing it. And implementation as usual remains the key.

One of the key parameters that the government wanted to improve was ease of doing business. The government had made it clear that India’s ranking on the World Bank chart should get better. After slipping briefly, India managed to go up 30 places in the 2018 rankings. 

To conclude, the performance of the Modi government has been above average on the economic front. According to Niti Aayog, all the macroeconomic parameters, including growth, inflation and fiscal deficit, have shown a considerable improvement in the last four years.