Economic Growth under the Modi Government: Key Initiatives and Achievements
Since the Narendra Modi-led Bharatiya Janata Party (BJP) formed the government in 2014, India has witnessed significant economic changes. This article explores the economic growth trends, key initiatives, and achievements during this period, beyond the simplistic comparison with the United Party of India (UPA) government.
Comparing Economic Growth Trends
Comparing the growth rates during the tenure of the Modi government vs. the United Party of India (UPA) government, it becomes evident that the performance is vastly different. Data from the Reserve Bank of India (RBI) shows that the average GDP growth rate under the Modi government was around 7.51% in the first tenure. In contrast, the UPA government's average GDP growth rate was significantly lower, hovering around 6.XX%.
The State of the Indian Economy
It's important to acknowledge that while there are challenges, such as inflation control and unemployment, the economic situation under the Modi government is definitely better than it was in the UPA era. The government has implemented a multitude of measures to foster economic development and structural reforms.
Key Initiatives Towards Economic Development
1. Abolition of Planning Commission and Formation of NITI Aayog
This monumental step shifted the focus from a five-year plan structure to a more flexible and long-term planning approach. NITI Aayog introduced plans of different durations, including three-year, seven-year, and 15-year perspectives. This is designed to better align with the volatile nature of the global economy and the long-term aspirations of the nation.
2. Introduction of GST (Goods and Services Tax)
The Goods and Services Tax (GST) was a landmark reform, consolidating numerous indirect taxes into a single tax system. This move simplified the tax structure, removed cascading taxes, and smoothed out supply chains, benefiting both businesses and consumers.
3. Demonetization of Old Notes
In 2016, the demonetization of 500 and 1000 rupee notes served as an anti-corruption measure. While this measure prompted anxiety among the unorganised sector, it also led to a significant increase in tax compliance. The black money held in cash was largely eliminated, contributing to a more transparent and tax-compliant economy. The revenue from additional tax collection was significant, providing a boost to government coffers.
4. Attracting Foreign Direct Investment (FDI)
The government has also eased foreign direct investment (FDI) norms, making India more attractive for multinational corporations (MNCs). This has led to an influx of foreign capital, creating jobs, and driving industrial growth. Programs like Make in India have encouraged MNCs to set up joint ventures with Indian companies, thus transferring technology and boosting local industry.
5. Make in India Program
Launched in 2014, the Make in India initiative seeks to position India as a manufacturing hub. This program leverages the country's demographic dividend, skilled workforce, and cost efficiencies. To achieve this, the government offers subsidies, tax benefits, and other incentives to foreign investors looking to set up manufacturing plants in India.
Conclusion
India's economic journey under the Modi government has been marked by significant reforms and positive growth indicators. While challenges remain, the government's efforts to enhance the quality of institutions and investment climate have brought the country closer to achieving its economic aspirations. These initiatives offer a glimpse of a more vibrant and innovative Indian economy in the years to come.
Frequently Asked Questions (FAQs)
How has the GDP growth rate under the Modi government compare to that of the UPA government?
The average GDP growth rate under the Modi government was around 7.51%, significantly higher than the UPA government's 6.XX%.
What is the impact of the demonetization of old notes?
The demonetization of 500 and 1000 rupee notes aimed to curb black money and corruption. While initially unsettling, it led to a rise in tax compliance, reducing the informal sector and increasing transparency in the financial sector.
How have the FDI reforms impacted India's economic growth?
The easing of FDI norms and the Make in India program have attracted substantial foreign investment, driving industrial growth and creating jobs. MNCs are more inclined to invest in India, leading to technology transfer and improved manufacturing capabilities.