T V Mohandas Pai
The Narendra Modi government completes five years in May 2019, during which it deployed models of development and governance that were significantly different from past governments. These models merit a detailed study that future governments can build upon.
India today is the fastest growing major economy in the world. In 2018, our economy reached a formidable GDP of $2.6 trillion and shows promise of hitting the $10-trillion mark by 2030! The Modi government has accelerated the journey towards the target with multipronged policies and focused investments.
The government has worked toward ensuring every Indian’s access to the bare necessities of life: home, a gas stove, toilet, food, water, power, a bank account with government benefits credited by Direct Benefit Transfer (DBT), and medical insurance through Ayushman Bharat. These measures are aimed to provide a solid foundation for rapid growth along with an improved quality of life. The Stand Up India and Mudra loan programmes, along with the Jan Dhan programme have dramatically enhanced access to credit for all sections.
Back to economics, reforms in taxation through the GST system have created a single national market for goods and services for the first time in India. Bringing together 29 states and 7 Union territories into a single system in five years is a remarkable achievement. The few technical glitches that were encountered in the beginning have since been ironed out and the protests against GST were mainly by small traders against having to come under the tax net. Tax evasion by unscrupulous importers has successfully been tackled by levying GST on every import and making this a credit on further sales. This has driven immensely beneficial feed-forward effects, with overall indirect taxes coming down and increased formalisation in businesses across verticals. For the first time, the honest taxpayer has benefitted with a reduction in taxes, increased ability to compete, lower costs and greater ease of doing business.
The IBC-bankruptcy laws have made many crony capitalists pay back their loans and divested many of their companies. For the first time in our history, we are seeing many who looted our banks taken to bankruptcy with a recovery of around 45 per cent. Phone banking has become a phenomenon of the past. Banks were forced to recognise their bad loans and recapitalised. This five-year period has also seen an increased focus on infrastructure development with targeted investments in roads, ports, railways, airports, waterways, and more. Road transportation is getting better every day, with increased transit speeds and capacity for larger freight vehicles bringing down logistical costs. With an unprecedented investment in railways, eliminating unmanned crossings, increasing average speeds, modernising stations, and improving passenger safety and comfort are becoming realities all over India. The aviation sector has been a global success with double-digit growth over nearly 60 months enabling every Indian to fly at a lower cost. Moreover, with GST, supply chain costs have reduced, resulting in shorter times to market, decreased wear and tear of vehicles, better fuel utilisation, and so on. These focused investments contribute to making Indian business more competitive. India’s economy is visibly transforming into a more productive and efficient engine of growth that the world has come to recognise, respect, and participate in. The Make in India Programme, particularly mobiles, and a focus on defence manufacturing by Indian companies will change the growth trajectory of Indian industry.
Prime Minister Modi has been hands-on on project execution in infrastructure, resulting in accelerated project completion, eliminating friction in the implementation of older projects, and improving overall efficiencies, preventing more cost increases and time delays. Many large construction and infrastructure companies that are capable of executing larger projects have been created. The massive spending on irrigation projects has increased reliable water supplies to our farmers. Reforms in farming through e-NAM and higher procurement prices have improved the flow of money into the farming sector. The income scheme of `6,000 per annum by DBT is a game changer for farmers, with more to come. No other country has managed such a massive change in such a short time as India has. Irrespective of your political affiliations, it is undeniable that these are a deeply impactful array of positive developments for our country.
For the five-year term of the NDA, India’s GDP is estimated to grow by over 76 lakh crore, with lower inflation, lower fiscal deficit, and lower CAD all implying a higher quality of growth. Conversely, the previous five years under Congress-led UPA consistently had a high fiscal deficit, high inflation and high CAD, rocking the very foundations of our economy. Latest data shows both savings rate and investment rate steadily increasing, thereby allaying fears of any decline. Contrary to false narratives, private sector investment rate has held up remarkably well during the last five years, between 2014-2019. FDI has also increased dramatically over the five years, a consequence of renewed confidence in our economy by overseas investors. Globally, India’s stock is high due to the massive diplomatic efforts which have deepened our relations across countries with increased respect for India and Indians.
Digital India and Start Up India programmes have been a masterstroke. Over $40 billion of investment has come in over the last five years into start-ups, creating 26 unicorns, 31 soonicorns, 7 lakh jobs and radically changing India, making it the third-largest start-up ecosystem globally. The $1.5 billion SIDBI Start-up Fund of Funds, several policy initiatives to promote start-ups, and the recognition of start-up founders nationally have infused new energy into this sector.
Job creation has been a major success of this government. For the first time, job creation was incentivised through the government paying the employer’s share of EPF for new jobs in a country which always incentivised capital and disincentivised jobs. The EPFO and ESI data over the last five years clearly show a massive increase in formal employment by over 2 crore. The burgeoning transport sector, evidenced by an increased sale of vehicles, has created over 1.5 crore jobs over 5 years. NPS data shows over 35 lakh new jobs being added in the last five years in the state and Union governments. Income tax data on employment in the professional sector shows over 40 lakh jobs. These 4 sources alone show over 4.25 crore jobs being created over the last five years. If we add other available job creation data sources, we can safely see the creation of well over 5 crore jobs across India.
In terms of governance, the NDA has an exceptional track record. There have been no corruption scandals in the central government over the last five years despite efforts by the Opposition to manufacture one with the Rafale deal, which lacked evidence. Transparency and openness have been a highlight for government contracts. Ease of business has been enhanced with India going up in global rankings. No longer does business go to New Delhi to influence policy! Many new programmes to foster growth have been institutionalised. The one big failure has been the increase in tax terrorism. Tax disputes and amounts locked up doubled over the five years!
So what of the future? India and Indians look forward to the future with a renewed sense of optimism. From the gloom of the UPA-2 era which saw huge corruption and massive economic underperformance, the NDA under Modi has indeed transformed India, ensuring a brighter future for all of us.
(T V Mohandas Pai is the Chairman of Manipal Global Education and a former director of Infosys)