5 min read.Updated: 26 May 2018, 07:51 PM ISTLivemint
As the Narendra Modi government moves to leverage its reforms policy in the run-up to 2019 Lok Sabha elections, Mint takes stock of the impact of these measures on both politics and the Indian economy
The Narendra Modi government completed four years in office today.
In the first four years, the BJP-led National Democratic Alliance (NDA) rolled out bold and far-reaching reforms, including implementing a goods and services tax (GST), resolving toxic assets in the banking system, cutting down the oil subsidy that distorted the energy market, clamping down on black money and promoting financial inclusion.
The historic GST rollout also put in place a new paradigm in the federal set-up with Union and state governments pooling their sovereignty to create a single market of $2.6 trillion without regional trade barriers. The insolvency and bankruptcy code of 2016 rebalanced the rights of promoters, banks, vendors and employees.
Some of the reforms, including demonetisation and GST, came with inevitable short-term disruptions for the Indian economy.
As the Narendra Modi government moves to consolidate the gains of these reforms in its last year in office in current term, Mint takes stock of the impact of these measures on both politics and the economy:
How NDA went from 8 states to 20 in four years of Modi govt
After setting up governments in all states of West and North and North-East India, barring Punjab and Mizoram, the Narendra Modi-led BJP is looking to increase its presence in the East and South even as it heads into 2019 Lok Sabha elections. (read more)
Free LPG, electricity for all villages boost Modi govt’s rural outreach
In the run-up to the 2019 Lok Sabha elections, the Narendra Modi government will look to reap political dividends out of the rural success stories when it presents its report card before the nation.
Under the Ujjwala scheme, the centre provided free cooking gas connections to 30.98 million poor families, as on 23 May. The rural electrification programme, or Saubhagya scheme, has also been a game changer with the government beating the deadline to provide electricity to all of India’s 597,464 census villages last month. (read more)
GST makes tax evasion tougher
The goods and services tax (GST) has added more indirect taxpayers, made tax evasion difficult, brought tax transparency to consumers and reduced the tax rates on many mass-use goods and services. However, it unexpectedly led to a disruption in economic activity in the months before the rollout as businesses cut down production as they adjusted to the new system. This led to a slowdown in the Indian economy in the April-June 2017 quarter, but it has recovered since. (read more)
Indian economy gets more formal in four years of Modi government
Though demonetisation and the goods and services tax (GST) led to a short-term disruption in economic activity, positive changes in key metrices of the Indian economy are visible over a period of time. For example, there has been a sharp increase in the number of both direct and indirect taxpayers, which is significant as the tax base and payrolls are usually taken as indicators of the formal nature of an economy. (read more)
Job creation still a challenge after four years of Modi govt
Contradictions on job creation and unemployment in India have dominated political discourse over past four years of the Narendra Modi government, and would only intensify in the run-up to the 2019 Lok Sabha elections. (read more)
Modicare can be a game changer
The Modi government is trying to bring more people under health insurance cover with the National Health Protection Mission. Billed as the world’s largest health assurance scheme, dubbed Modicare, it aims to provide free health insurance of Rs5 lakh per family to nearly 40% of the population, or more than 100 million poor and vulnerable families based on socio-economic caste census.
“If Modicare is implemented well, it would be the most needed ‘social safety net’ for healthcare as treatment of non-communicable diseases is long-term and tertiary care is expensive. Volumes and better-managed reimbursements to private providers will be motivating for price reductions and scaling up operations. This would be as close as India can get to universal health coverage," said Usha Manjunath, director, Institute of Health Management and Research. (read more)
Insolvency and Bankruptcy Code resets corporate rescue regime
Rescuing sinking companies or exiting doomed businesses has been a pain for investors for decades. Things have turned smoother under the insolvency and bankruptcy code of 2016, that rebalanced the rights of promoters, banks, vendors and employees. A set of changes that are expected to be made to the code shortly will give home buyers a say in deciding the future of defaulting builders, along with their lenders. (read more)
Labour reforms slow down despite policy revamp
There are perhaps three key reasons why labour reforms slowed down. First, the government was seen as pro-industry and anti-worker, inviting criticism from all the trade unions, including the RSS affiliate Bharatiya Mazdoor Sangh (BMS). Second, labour reform was pushed to the back seat to clear key financial reforms like the goods and services tax (GST) as the government could not have otherwise created a conducive atmosphere for passage of GST. Third, when there are not enough jobs, creating an atmosphere of mistrust among workers would have been electorally negative. (read more)
Naxals find their stronghold shrinking
“If you look at the last four years, we have made significant progress. LWE areas, especially those in Chhattisgarh and Jharkhand, were neglected before 2014. But we have introduced infrastructure projects that are ushering in development in these areas and have also been sending out troops on area combing operations to destroy Naxal hideouts," said the senior home ministry official cited above, requesting anonymity. (read more)
A thumbs up for better connectivity
Over the years, the speed of road construction had become the benchmark for India’s infrastructure creation. Now, the Narendra Modi government has set in play a new integrated infrastructure programme, which involves building of roads, railways, waterways and airports.
The centre has also been trying to leverage roads, railways and waterways to bring India’s logistics costs down to 8% to make the economy competitive. Since long, India has been grappling with high logistics costs of 14% (as a percentage of cost of the product), which make exports uncompetitive vis-à-vis those of China, where logistics costs add up to just about 8-10%. (read more)
The Narendra Modi lexicon, updated list
The Narendra Modi-led National Democratic Alliance continued to put out slogans, short forms and alliterations in the fourth year in power—though fewer in number—to create a buzz around its government schemes and projects. Like in the previous three years, Mint updates the Modi lexicon list with the new buzzwords and catchphrases that were added in the fourth year. (read more)
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