Hits and misses of 9 years of Modi governmentPremium Story
The Indian Express | 1 week ago | 30-05-2023 | 01:45 pm
The Indian Express
1 week ago | 30-05-2023 | 01:45 pm
The NDA government headed by Prime Minister Narendra Modi will complete nine years on May 30. The past nine years have witnessed several landmark events, including demonetisation of high-value currency notes (2016), the introduction of Goods and Services Tax (2017), the outbreak of Covid-19 pandemic, a call for making India self-reliant (Aatmanirbhar) amid aggression on borders, and an emergence of a new class of beneficiaries — the “Labharthi Varg”.Modi, who ascended to the top post by getting a clear majority and took oath as the PM on May 26, 2014, is the fourth-longest serving PM after Jawaharlal Nehru, Indira Gandhi and Manmohan Singh, and the longest serving PM from a non-Congress party. Here are nine charts showing the journey of the last nine years:India became the world’s fifth largest economy by overtaking the United Kingdom last year. It is now behind only the US, China, Japan and Germany. However, India’s GDP growth trajectory has remained uneven in recent years. The main reason is Covid-19, a global outbreak with severe domestic repercussions that resulted in a contraction of the economy during the financial year 2020-21. Even before Covid halted economic activities, the economy was on a downward track after registering over an 8% growth rate in 2016-17 — the year that saw demonetisation of high-value currency notes of denominations Rs 1,000 and Rs 500. In the following years, India’s growth rate slowed down to 6.8% in 2017-18 — as the businesses adjusted to the change in indirect tax system after the introduction of GST with effect from July 1, 2017. It came down further to 6.45% in 2018-19 and 3.87% in 2019-20. During the Covid lockdown (financial year 2020-21), the growth plummeted to -5.83%. However, it bounced back to 9.05% in 2021-22, primarily on the previous year’s low base. In 2022-23, the growth again moderated to 7%.Per capita income followed the same trajectory as the rise and fall in the GDP. The annual rate of growth in the Per Capita Income has been recorded in the range of -8.86% to 7.59% during the last nine years. (See Chart-1).One area that has remained in focus of the Modi government is investment. The Centre has taken various steps to encourage domestic entrepreneurs and to attract Foreign Direct Investment (FDI). Be it ‘ease of doing business’, focus on minimising compliance, liberalisation of the FDI policy for various sectors of the economy or ushering in legislative reforms, the government has taken several initiatives to create a favourable atmosphere for investment. These efforts have yielded some fruits. For instance, FDI inflows increased from $45 billion in 2014-15 to $84.83 billion in 2021-22. However, it registered a fall in the following year and declined to $70 billion in 2022-23. (See Chart-2)One of the indicators of rural distress is the performance of the National Rural Employment Guarantee Scheme, which was launched to provide a guarantee of 100-day employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work. The rise in the number of NREGS beneficiaries is a sign of growing distress in rural areas. Data available on the NREGS portal shows that 4.14 crore families availed the rural job scheme in 2014-15. This number peaked during Covid and reached 7.55 crore during 2020-21, when many migrants walked back to their villages in view of the pandemic. Thereafter, it came down marginally to 7.25 crore in 2021-22. However, it is still over the Rs 6 crore mark (6.18 crore families availed the scheme during 2022-23). (See Chart-3)Infrastructure has been one of the priority areas of the Modi government in the last nine years. Be it roads, railways, or airports, infrastructure projects have increased in number and size. This has reflected in the growing capital expenditure on them over the years. One of the success stories has been highways construction. However, several big-ticket projects, like the bullet train project, are yet to see the light of day. The total length of highways in the country had increased from 97,830 km in 2014-15 to 1,44,955 at the end of December 2022. (See Chart-4)One of the biggest challenges the NDA government has faced in the last nine years was the Covid pandemic. However, data shows that health expenditure (as a percentage of the GDP) has not seen a big change. (See Chart-5). In the period 2014-15 to 2022-23, the expenditure on health remained in the range of 1.2-2.2%. The Central government’s share in the current health expenditure is just a little over 2%. According to National Health Accounts Estimates for India 2019-20, “Of the Current Health Expenditures, the Union government’s share is Rs. 72,059 crore (12.14%) and the State Governments’ share is Rs.1,18,927 crores (20.03%). Local bodies’ share is Rs. 5,844 crore (0.99%), households’ share (including insurance contributions) is about Rs. 3,51,717 crore (59.24%), out-of-pocket expenditure being 52.0%.Like health expenditure, spending on education too has remained low. Though the education sector has witnessed a big reform push with the introduction of the New Education Policy, the expenditure on education (as percentage of GDP) has remained in the range of 2.8-2.9% during the last nine years. (See Chart-6).The government took a bold decision to demonetise high-value currency notes in November 2016. The move was expected to hit the black economy and move towards lesser use of cash. However, data shows that neither has the tax-GDP ratio increased, nor has the use of cash gone down. For instance, the direct tax-GDP ratio has remained in the range of 4.78-6.02% during the last nine years. (See Chart-7). On the contrary, the currency to GDP ratio has increased from 11.6% in 2014-15 to 14.4% in 2020-21. However, it came down marginally to 13.7% in 2021-22. This shows that despite a push for digital transactions through new initiatives like UPI, the use of cash is still on the rise. (See Chart-7)In recent years, the government has focused on Make in India. It even launched the Aatmanirbhar Bharat initiative during the Covid-19 pandemic. However, data shows that India’s share in world merchandise exports has stagnated in recent years. From 1.69% in 2014, it has increased marginally to 1.77%. (See Chart-8)The last nine years have seen the emergence of the ‘labharthi varg’ — a new class of beneficiaries of Central government schemes. The Modi government used the architecture of the DBT (Direct Benefit Transfer) scheme, which is based on JAM (Jan-dhan, Aadhar, Mobile) trinity. Between 2014 and 2023, 49 crore bank accounts were opened under the Pradhan Mantri Jan Dhan Yojana. The figure of deposits in the Jan Dhan accounts has increased from Rs 17,219.70 crore in May 2015 to Rs 1,97,193.67 crore in May 2023. Besides, other welfare schemes like the Swachh Bharat Mission, Pradhan Mantri Awas Yojana, PM Ujjwala Yojana and PM Mudra Yojana have seen an unprecedented scale of implementation in recent years. For instance, 11.72 crore toilets were built under the Swachh Bharat programme, while over 3 crore rural and urban houses were built under the PM Awas Yojana. The government also provided free foodgrains to 80 crore people under PM Garib Kalyan Anna Yojana.