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There are key differences in how the Indian economy has fared during Prime Minister Narendra Modi’s three years in office and that of his predecessor Dr. Manmohan Singh. Taking some of these variables like GDP, inflation, etc. the article tends to draw differences between the same.
There is no doubt at all that demonetization and the GST rollout have resulted in major disruptions affecting GDP figures. However, we need to look at both, the UPA and NDA governments to arrive at a holistic view of the economy. The NDA’s “Make in India” project launched in 2014 was designed to develop India as a manufacturing hub that would lead to the creation of jobs for the masses. Manufacturing growth is linked with industrial production and the UPA inherited an industrial growth of 5.4% that came down to 4.2% when it demitted office in 2014. GDP growth in 2004 was 8.2%. This was because of UPA’s strong performance in the manufacturing and agriculture sectors. The GDP was 6.9% when Modi became prime minister in 2014. Year-on-year GDP growth was on the rise when Dr. Singh assumed office in 2004 but was falling when Modi took over in 2014, inheriting an economy that was sluggish and stricken by a policy paralysis and corruption.
Modi’s government has been criticized for a decline in credit growth and private investment. Investments are an important aspect of the capital formation cycle. It must, however, be borne in mind that most loans that have turned bad were given during the UPA regime. If such loans were given to politically powerful corporates without properly assessing their creditworthiness it is a bit rich to hold the NDA govt. responsible for the consequences that followed. This govt. has acted proactively by making amendments to the Banking Regulation Act, 1949 and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act 2002 and the introduction of the Insolvency and Bankruptcy Code.
So far as the Modi government’s track record of creating direct jobs go, it does paint a dismal picture. However, this is on account of factors such as a global economic slowdown and the disruption caused by demonetization.
Inflation was on the rise when Dr. Singh demitted office in 2014. When Modi took over in 2014, retail inflation stood at 8.3%. In April 2017, retail inflation had come down to 2.99%. Exports were one weak sector that Modi will need to correct in the days ahead if the govt. wishes to keep the trade deficit in check.
The rupee was under severe strain during the latter years of Dr. Singh’s stewardship of the economy. However, an encouraging rise in its value has been noted. Economists, however, are of the opinion that it is a short-term trend.
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