The Impact of the BJP Governance (2014-2019) on India’s Economy: A Detailed Analysis
The period from 2014 to 2019 marked a significant chapter in India's economic history, characterized by significant changes in both growth dynamics and policy paradigms under the Bharatiya Janata Party (BJP) governance. This article delves into the various economic policies introduced during this tenure and their subsequent impact on the Indian economy.
Overview of Economic Growth
From a mere 2.04 trillion USD and the 10th position globally in 2014, India's economy saw a dramatic increase to 3.50 trillion USD and ascended to the 5th spot by 2019. This growth trajectory is reflective of the ambitious economic policies that were introduced during this period.
The Controversy of Demonetization
One of the most debated and ultimately impactful measures during the BJP's tenure was the decision to demonetize 500 and 1000 rupee notes in November 2016. Although the move was heralded for its anti-narcotic and black money crackdown potential, it inadvertently hampered economic activity in the short term, leading to a slower growth rate until 2017.
Challenges and Consequences
Employment saw a significant downturn during this period. According to CMIE and India Today, the national unemployment rate peaked at 6.1% in 2018, the highest since 1972-73. A staggering 11 million jobs were lost in 2018. Rural informal workers losses were particularly pronounced, with 9.1 million losing their jobs, compared to 1.8 million in urban areas. Despite these harsh realities, then Cabinet Minister Piyush Goyal argued that his government received a "collapsing economy" from the previous UPA regime.
The telecom industry, once a promising sector, faced numerous challenges. The industry, marred by a debt of nearly 500,000 crores, saw sales decline from 8% growth in 2014-2015 to a negative 4.9% in 2017-2018. The main reasons cited were GST, demonetization, and the competition from Reliance Jio.
Impact of GST and Other Policies
The introduction of the Goods and Services Tax (GST) in 2017 was intended to streamline the tax system, but it also brought with it its own set of complications. The GST policy led to job losses, particularly in industries such as gems and jewelry, leather, and textiles, due to its implementation.
Gem and Jewelry Sector
The gems and jewelry sector, which once thrived at a growth rate of 27% in 2011-2012, experienced a drastic downturn, with a negative growth of 1.8% in 2017-2018. This sector was hit hard due to both the GST and demonetization measures.
Leveraging Data and Analysis
Analysis from the Central Monitoring System (CMS) and sector-specific data from various industry bodies paint a clear picture of the challenges faced by the Indian economy during this period. The leather industry, a critical sector employing over four million people, faced significant challenges due to cow protection policies, demonetization, and the introduction of GST. Profits, which had been stable until 2014-2015, showed a consistent decline thereafter.
Economic Stress and Inflation
The overall economic stress resulted in inflation and deflation concerns, declining income growth, and downward pressure on average wage rates for labor. Farmers were particularly affected, with unfavorable terms of trade due to GST. Moreover, the demonetization effort led to a reduction in investments and a slowdown in economic activity.
In conclusion, while the BJP government aimed to reform and strengthen the Indian economy, the policies implemented, such as demonetization and GST, had significant and unintended negative consequences on various sectors, including employment, industry, and investment. As a result, the stability and resilience of the Indian economy have been tested, necessitating a comprehensive review and policy re-evaluation in the future.