Prime Minister Narendra Modi will have to spend sleepless nights after the consistent economic downturn in three years with no road map for recovery in sight that could redeem his government prospects in the coming elections.
Narendra Modi’s tall claims of taking the country’s economy on the path of fastest growing economy in the world with the implementation of reforms such as Demonetisation and GST has turned hollow and shaken the pillars on which his government is standing and came to power in 2014.
Even the Opposition led by Congress criticised Modinomics coupled with Finance Minister Arun Jaitley’s reforms after the government on Friday predicted that the country’s gross domestic product would grow by 6.5 percent in the 2017-18 financial year, which is infact the lowest number the country has seen in four years.
Attacking Modi, Congress president Rahul Gandhi said that the finance minister’s “genius” combined with Modi’s “Gross Divisive Politics (GDP)” had given India a 63-year low in bank credit growth and an eight-year low in job creation and had seen new investments dip to their lowest point in 13 years.
He claimed the fiscal deficit had increased and projects had been stalled.
India’s economy which is mainly influenced by rural or agriculture , small enterprise and construction operating mainly on cash transactions was severely hit in 2016 first by sudden banning of nearly 86% of the cash in circulation -whose effect is still evident seen and small businesses ,traders and unorganised sector is facing teething troubles after the roll out of a goods and services tax (GST), the biggest tax over haul since independence that replaced the numerous state and federal taxes in June 2017.
No new industry has been set up, India’s consumer confidence has plunged, the fixed investment rate has fallen, labour-intensive businesses such as construction have slowed down, many factories have been shut down, leading to millions of people losing jobs.
The GST transition impact is clearly visible,” said Shubhada Rao, chief economist at Yes Bank. Sectors such as manufacturing and hotels were badly hit, she added.
RSS, the parent organisation of Bharatiya Janata Party branded Narendra Modi as the best Prime Ministerial candidate of BJP who has the potential of turning around the economy of the country by keeping intact Hindu nationalism after Gujarat successful development model. But instead there is a consistent slowdown in the economy as GDP growth in 2015-16 was 8.0, then 7.1 in 2016-17 and further declined to 6.5 in 2017-18.
RSS, Modi and his marketing team including his online social media actively managed to build Brand Modi by implementing marketing and branding strategies that overshadowed brand BJP to showcase Modi as the best person for improving the economy of the country.
The prime minister’s “Make in India” has not been a success story therefore, the significant decline in exports and rise in imports will increase the stress on the economy.
The economy continues to be in stress as there is likelihood that government may increase the fuel prices that will have a cumulative effect on the freight charges in the railways, increasing food prices and transportation costs.
Attacking the ruling dispensation over the state of the economy,former Finance Minister P Chidambaram shared the concerns of the entire Opposition, saying, “No amount of sugar coating, false bravado and rhetoric along with headlines management can conceal the stark reality.Our worst fears and warnings of an imminent economic slowdown have come true.”
Modi has been repackaging the schemes and ideas of pervious UPA government and GST bill was introduced in Parliament in 2011 by then UPA government but Bharatiya Janata Party government introduced a different GST bill with immense modifications and passed into law in 2016.
The complex rules and technical glitches meant the GST, aimed at transforming India’s 29 states into a single customs union, hit millions of small businesses.
Uptill now, the people’s reaction on the impact of Demonetisation and GST has not been so strong but in the long run, Indian citizens will feel the real effect of these economic policies of Modi which in turn will lead to huge trust deficit between the Modi government and the masses as Prime Minister promised to create 2 crore jobs per year and robust economic growth.
With crucial assembly elections in 2018 and looming 2019 Lok Sabha elections, it becomes necessary for Modi to reduce deficits and arrest slowdown of growth otherwise he will face a humiliating defeat.
The foreign trips of Prime Minister Narendra Modi and his Cabinet colleagues cost the exchequer Rs 567 crore in the 2015-16, an increase of more than 80% from the previous year, the US trip was probably the most expensive and according to a release by Ministry of Commerce and Industry, the FDI inflow to India in the financial year 2016-17 was $60.08 billion. But how this amount of FDI will be returned back with interest when there is no economic activity in the form of industrialization.
By: Arti Bali