The Hindu. Other than being legally contentious, it was an attempt to divide a shrinking cake rather than trying to expand its size. The bullet trains became the metaphor for a fast track to development, ditching the slow-moving bullock carts moving along roads made uneven by rampant corruption. Quotas, subsidies, and hand-outs were about to be replaced by growth, opportunity, and investment.
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As we approach the elections, five years after Narendra Modi was elected with a thumping majority on a plank of economic development, no one talks of achhe din or Modinomics any more. Is it a case of mission accomplished - or topic-change out of necessity? How does the Modi government's economic scorecard look if we consider some key indicators of the country's economic health? Modi had promised to revive the economy and reverse the economic slowdown in the last years of UPA II.
If we use a different benchmark and compare India's growth rate with the average growth rate across the world, even then the last four years do not stand out.
Yes, it is one of the countries with the highest growth rates in the world, but that was true in the previous decade too. In fact, the gap between India's growth rate and the global average growth rate has shrunk, not widened, between and compared to However, GDP growth rates are only meaningful to the extent they capture improvements in the standard of living of ordinary citizens.
Modi's promises pertaining to livelihood were ambitious: million jobs over 10 years, or 25 million jobs a year. If we look at a CMIE series based on household surveys, the number of employed persons declined from During , 1. For , the corresponding figure was 1. If we look at data from government sources, the unemployment rate was at 3. No wonder that this report, too, is being withheld by the government despite having been approved by the National Statistical Commission. The problem is far worse in the agricultural sector that accounts for over half of India's workforce.
Not only has this not been delivered but the Indian farm sector is crippled by a widespread crisis. At an average of 2. Short of an agricultural revolution, this was an absurd promise to start with. Rural wage growth rates are at a year low and in , growth was less than the rate of inflation, so it was negative in real terms.
Prices of agricultural produce have increased at a much lower rate than that of non-agricultural goods over this period, and after demonetization, crop prices have tended to be deflationary. This has squeezed rural income and purchasing power relative to the non-agricultural sector. In the last five years, the corporate sector has been marked by abysmally low growth and an unwillingness or inability to invest in new capacity and jobs.
Curiously, even as GDP numbers supposedly continue to grow at a reasonably healthy rate, at least as per declared data, corporate profits have languished over the last four years. Most companies have massive unutilised capacity, which is why they are loath to invest. When companies do not build new capacities and credit dries up, jobs vanish, which is precisely what is happening.
If we look at other sources of demand that could potentially provide a boost to the economy, e. Since , Indian exports have grown at a dismal average pace of 1. This, in turn, has increased India's current account deficit CAD to 2. Outside the organised sector, the problem is graver.
The Prime Minister's demonetization scheme dealt a deathly blow to medium and small enterprises MSME and unorganised units, from which they are yet to recover.
The CMIE estimates that 3. Much is made of the government's fiscal rectitude - how it has managed to rein in the fiscal deficit to 3. But reports from the Comptroller and Auditor General of India CAG suggest that this is largely due to creative accounting methods to roll over subsidy data, and the windfall of falling oil-prices that allowed the government to raise fuel taxes.
Another oft-repeated claim is that inflation was consistently higher under the UPA. Indeed, if we take the annual inflation rate in consumer or retail prices as measured by the Consumer Price Index, the average for the UPA period was 8. However, if we take the difference between India's CPI inflation rate and the world average, the corresponding figures are 3.
Therefore, while the Modi government deserves some credit for fighting inflation, this seemingly dramatic improvement can be partly attributed to external factors affecting the global economy. To be fair, "achhe din" is not all about economic prospects in the narrow sense. If we look at some other indicators of quality of life or welfare, such as infrastructure and public services and amenities, there has been some progress.
For example, the total number of rural houses constructed under various central government schemes since has more than doubled, and so has rural road construction. There has been significant progress in building rural toilets under the Swachh Bharat Abhiyan , and in providing electricity and liquefied petroleum gas LPG connections under the Saubhagya and Ujjwala schemes. Considerable progress has been made in financial inclusion: more than 33 crore bank accounts have been opened, with However, improvements in these areas notwithstanding, there are concerns about the extent to which the government claims success under these schemes.
Moreover, it is notable that in the December state elections, the ruling party suffered electorally in some of the key heartland states which suggests the crisis in people's livelihoods has dominated any improvements in other aspects of quality of life.
Five years down the line, this then is the inescapable summary of the economic scorecard: job growth at multi-year lows, an agricultural crisis, a crippled unorganised sector, currency value at near all-time lows, a soaring current account deficit, high interest rates, a half-frozen banking system, a struggling corporate sector, sinking exports and a GDP growth rate that does not stand out compared to the earlier decade, in spite of constant revisions.
A longer version of the essay was published in The India Forum. He was recently elected Fellow of the British Academy. Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
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How Modinomics scores over Manmohanomics in the re-ignited GDP debate
By opting for demonetization and not rampant deficit financing like the US or Japan, Prime Minister Narendra Modi, in one sweep has averted the liquidity trap and the problems that Obamanomics was fettered with. Demonetization on the other hand, increases the velocity of money, which means money exchanges hands more frequently within the formal channels. Of this, million UPI transactions were recorded in August , alone. On the fiscal front — with primary deficit currently at just 0. This is a huge improvement from the 5. The fact that as of June , short-term debt as a portion of overall debt stood at just
Opinion | Why critics of Modinomics are more wrong than right
After 5 years of economic expansion, growth has slowed in last few quarters. But fundamentals of the Indian Economy remain stronger than ever-as has been reiterated by many including the IMF chief. The FM announced her second Budget on Saturday. Any analysis, thus, must start with the long distance travelled in the last six years under careful, unwavering rebuilding of economy by Narendra Modi govt-Modinomics1. Modinomics had to deal with all this as also deliver on growth. In addition to the detoxification, PM Modi delivered on growth and structural reforms.
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