Modi's Impact on India: Economic and Governance Reforms

Under Prime Minister Narendra Modi, the Indian economy and governance systems have undergone significant transformations. Since his government took office in 2014, there have been several concrete steps taken to address various issues and improve the state of the nation. This article will explore the key reforms undertaken and their impact on the Indian economy.

Key Steps Taken by Prime Minister Modi

Demonetization, Aadhar Card, and Online Services

One of the most notable steps taken by the Modi government was the demonetization of large currency notes in 2016, aimed at rooting out black money and improving tax compliance. Additionally, linking the Aadhar card to various government services has significantly enhanced the efficiency and accessibility of public services for citizens. The government has also actively promoted online services and electronic transactions to reduce dependency on cash and improve transparency.

LPG Connections and the Best Step: Abolition of Article 370

The government has also made significant strides in extending liquefied petroleum gas (LPG) connections to millions of households, benefiting the rural and underprivileged sections of society. The best and biggest step that Prime Minister Modi has taken, according to many, is the abolition of Article 370, which granted special status to the state of Jammu and Kashmir, thereby resolving a long-standing issue and bringing the state into the mainstream of the Union of India.

Economic and Governance Reforms in Detail

Fixing Public Sector Banks

For decades, public sector banks in India faced the challenge of bad loans due to indulgence of politicians and industrialists. Under the Modi government, the Insolvency and Bankruptcy Code (IBC) was introduced in 2016, leading to the recovery of millions of rupees in bad loans. This has helped these banks rebuild their capital and support credit growth. Major cases such as Bhushan Steel (Rs. 35,000 crore), Electrosteel (Rs. 5,000 crore), and Ruchi Soya (Rs. 6,000 crore) are prime examples of how IBC has worked to recover funds and strengthen the banking system.

Source: Financial Express, DNA, Business-Standard, The Hindu Business Line

Increased Formalization and Tax Compliance

The introduction of the Goods and Services Tax (GST) has significantly improved the tax compliance culture in India. By the first year after its implementation, the number of indirect tax payers increased by over 50%, and 34 lakh new businesses were brought under the GST regime. Direct tax collections also surged to record levels, and GST has been hailed as a lesson for developing countries to combat tax evasion. For the first time since 1970, India's tax-to-GDP ratio has crossed 11.5% and is expected to reach a historic high of 13%, thanks to these reforms.

Source: The Hindu Business Line, Financial Express

Arresting Leakage of Government Funds

The government has also taken steps to reduce leakages in the distribution of subsidies and government funds. The linking of the Aadhar card to various government services has helped in identifying and sanctioning funds only to real and existing accounts, making a significant impact on the recovery of fake or ghost accounts. For instance, over 130,000 fake teachers earning government salaries, 3.5 crore LPG connections using government subsidy, and 1.6 crore fake ration cards have been identified and rectified.

These measures have resulted in an annual savings of Rs. 65,000 crores (Rs. 650 billion). Furthermore, a World Bank report indicates that Aadhar linking could save an annual amount of Rs. 11 billion for the Indian government by reducing corruption and leakages.

Reducing Government Subsidies

The government has also taken measures to reduce subsidies, particularly for goods such as liquefied petroleum gas (LPG). While the article discusses that as of 2013, detailed statistics on the reduction of subsidies are not provided, it is evident that the government has been working to optimize its expenditure and improve the efficiency of subsidy programs.

Source: Business Today

Conclusion

Prime Minister Modi's government has made substantial progress in various domains, from fixing the public sector banks to improving the tax-to-GDP ratio and curbing leakages in the distribution of government funds. These reforms have helped in bringing about a financial turnaround for many government enterprises and have revitalized the economy. As India continues to grow and evolve, the impact of these changes will become increasingly evident.