An 8-on-10 For Modi’s Leadership
Today, India is the world's fifth-largest economy by GDP, at $3.34 trillion, up from tenth place in 2014. It grew at a phenomenal 16 per cent in FY23 (18.4 per cent in FY22) in nominal terms, belying forecasts that growth would slow down after the pandemic. India remains the only large economy to continue its economic pace. The April 2023 update of the World Economic Outlook predicts India to be the fastest-growing economy in FY24.
Increased stability in several macroeconomic variables lends to this positive outlook. The post-pandemic tax buoyancy continues at the Central level and in many states, growing at more than 20 per cent YoY. Average monthly GST collections in FY23 was Rs 1.51 lakh crore. India also continues to strengthen its financial and banking governance. The manufacturing and construction sectors, which have strong feedforward effects into other economic sectors like materials consumption, employment and tax generation, are expanding with multiple population-scale projects. Fiscal deficit targets are also returning to the lower pre-pandemic levels. The nation continues to be a favoured destination for global investment and a significant component of most foreign investors' Asia allocations.
Driving Capex & Inclusive Growth
The Central government continues to drive significant capex, building on quantity and quality, as they have in successive Budgets for nearly a decade. The pace of highway construction has grown almost 300 per cent in the last seven years – total length has increased from 1,289 km in FY16 to 3,963 km in FY22. Rural road connectivity and coverage are now at 99 per cent. A total of 400 high-speed Vande Bharat trains have been commissioned, of which 16 are already operational. Most Indians, especially in the rural areas, had probably not witnessed infrastructural development in their lifetimes before the NDA government's slew of projects.
India leads the world in the pace of digital and financial inclusion. The government continues to foster growth and innovation in the development of population-scale Digital Public Goods (DPG). Forty-nine crore previously "unbanked" citizens could open Jan Dhan bank accounts with multiple benefits; 1.74 crore farmers are now registered on e-NAM, allowing for greater inclusion of the agricultural class in the markets. The Direct Benefit Transfer network has disbursed Rs 29.4 lakh crore worth of benefits to disadvantaged groups.
The NPCI and RBI recently launched innovations like UPI Lite, which simultaneously drives greater digital payments activity while promoting cost-efficiency for banks, and UPI 123Pay, which allows feature phone users to transact on the UPI platform using voice or proximity-based sound systems. Economic inclusion is an ongoing priority for the Modi government.
Almost every one of India's massive 140-crore population now has a roof over their head, water in the tap, a working toilet, power in the switch, food on the table, a gas stove, a mobile connection, a bank account with money, a road to their village, internet connection, education for their children, and health insurance. No PM in India's history has done as much for the poor as PM Modi has done in 9 years.
Areas That Needs Swift Action
While the Modi government has overseen and led some of the largest step-function developments in Independent India in its 9-year governance mandate, there are still some areas where swift action is required.
Tax terrorism continues despite several initiatives taken to reduce tax disputes. The quantum of tax disputes has increased from Rs 4.5 lakh crore in 2014 to around Rs 12 lakh crore in 2023. Despite the PM thanking taxpayers in Parliament, it is clear the Finance Ministry doesn't respect honest taxpaying citizens, instead treating them as government captives. The attitude, policies and laws all need remedy.
The justice system needs to be fixed. There are hardly 21 judges/million population against the optimum 50. Prisons are full of under-trials waiting for their moment in court. Judicial capacity must be quickly built up, particularly in the lower judiciary.
Several beneficial measures have been passed but are yet to be implemented. For example, the labour laws were amended years ago but still need to be implemented. This is key to unlocking the potential of India's demographic dividend and becoming a global manufacturing power. Police reforms are long overdue. The force is still rooted in its colonial and feudal origins, which has proved dangerous for the very citizens they are supposed to protect.
All the above-mentioned points are key to upholding India's democratic values, and implementing them swiftly will hold the country in good stead as it rises through the global economic order.
Commanding Respect Globally
On the international affairs front, India’s standing is at an all-time high. The Modi government has strategically adopted a diplomatic and collaborative attitude, as seen with the Quad, during the Covid-19-pandemic, and in the Middle East, while simultaneously standing firm on the nation’s sovereign interests, as seen with the border conflicts with Pakistan and China, and the Ukraine war. On all fronts, there is strong momentum behind India’s growth and influence over the next 25 years as we approach a century of Indian Independence.
Overall, the NDA government under PM Modi has done exceptionally well in multiple vital areas. Addressing the remaining areas will balance out India's socio-economic development and lend momentum in the run-up to the 2024 Lok Sabha elections. We rate the efforts of the NDA government over the last nine years a robust 8 on a scale of 10.
Pai is Chairman, Aarin Capital and Holla is Technology Fellow, C-CAMP
