Indian economy under Modi

Modi and his BJP regime are in the saddle since the last decade, and they pin down their success in office on the economic growth India has achieved. There is a broad consensus that India has progressed steadily in the economic field and has past the take-off stage and is now proceeding towards economic ascendancy.

India has made huge strides in banking and business transactions by introducing and implementing digital techniques. It must however be kept in mind that the economic progress was initiated by the Congress government under PM Manmohan Singh that gave much-desired freedom to the corporate sector resulting in aggressive capitalistic performance aiding economic growth.

Modi regime has instituted taxation changes and has pushed more of the economy into the formal sector enacting Goods and Services Tax like Europe’s value-added tax that has extracted more revenue from the people and business sector who complain all the time for losing a large chunk of their income. Modi has used the money so obtained for public spending particularly launching projects aimed at winning voters instead of long-term economic benefits.

Though Indian economy has doubled in size in the last decade, but it is acknowledged that the economic gains are unequally spread as the bulk of India’s growth depends on those at the top of the income ladder, including a coterie of huge and tightly controlled businesses. Modi actually encourage a small band of entrepreneurs who always do his bidding and reap the benefits.

It is also a fact that 90 percent of Indian population subsists on less than $3500 a year that is far less than the income of the privileged elite. The image propagated by the regime is of shining India that was the pattern followed by previous BJP government headed by PM Atal Bihari Bajpai, but it proved to be a futile pretext that cost him election.

Modi has tried to make life bearable by instituting welfare programmes in poor rural districts and his government supplies sacks of free grains, toilets, gas cylinders and housing materials. This is an exercise to win votes, and many opine that such policies are hollow in intent and may retard economic growth in the long run.

It is widely acknowledged that it is Modi’s ability to control all levers of powers with strong tendency for showmanship that is his first priority. He tries to brush-off the fact that India’s rates of economic growth of the past decade have been very similar to those of the decade that preceded it, under a government that Modi often blames for wrecking the country. Modi excels is self-promotion as was evident during the recently held Group-20 summit that witnessed his slogans took credit for virtually every positive development with reference to economy. His penchant of personality cult is also clearly visible as his images are everywhere in the country than any other democratically elected leader.

It is getting obvious by the day that expressing even mild skepticism is avoided and economists who depend upon the government work are extra-ordinarily careful about frankly speaking about their reservations regarding the handling of economy by the Modi government. On the other hand, economists who do not work with the government are becoming scarce as independent think tanks are raided and shuttered and their personnel incessantly hounded. With political competition all but eliminated at the national level and Modi keeps a tight grip on almost all influential segments of society.

It is widely known that Modi has utilized state power to make things happen in economic field of activity and his autocratic approach is visible everywhere. His abrupt and autocratic decision in 2016 when he declared all large currency notes are no more valid stunned the nation and this action virtually crippled the economy. It is also widely acknowledged that Modi regime’s economic decision making is highly arbitrary and is usually without any checks on it. This overcentralized approach has given rise to economic distortions and income inequalities. It is reported that biggest companies have hugely profited in the process as could be borne out by the fact that of the $1.4 trillion in wealth created by blue chip stocks from 2012 to 2022, eighty percent went to 20 companies that are known to be in the good books of the government.

Modi’s favoritism towards few entrepreneurs is no secret as is evident by the fact that Gautam Adani emerged as the second richest person after Elon Musk so suddenly that everyone was surprised. Adani’s wealth mushroomed a year after Modi was elected and grew eight times after he was re-elected in 2019. Adani group is widely known to have become the logistics arm of the government building up ports, highways, bridges and solar farms at speeds never before seen. Interestingly, Adani was accused of fraud by a New York trader costing a whopping $150 billion though he recouped most of the losses but this episode exposed a fatal risk in Modi’s economic preference to a select few and this tilt is now challenged in the Indian legislature.

Though sales of luxury goods are booming but sales of motorbikes that transport more Indians have been stagnant. Another worrying aspect is the job situation as officially the government only acknowledges 7 percent unemployment, but large-scale unemployment is rampant. Indians are desperate to run-off to greener pastures and are seen fleeing in every direction they get the opportunity to do so. It is also widely commented that red tape still holds sway in Indian economic affairs that impedes business and does not let the benefits of economic growth to trickle down to the common man.