4 years of Modi government: Efforts on economic front will pay-off in the long run
The opinion on the way Prime Minister Narendra Modi's government handled the economy in the last four years is divided. While the opposition leaders would vehemently criticise every move of the BJP government, the allies would praise it, barring, of course, the Shiv Sena. Even the experts on economic matters will not give a straight forward answer about the way the economy was handled by the Modi regime since assuming office.
Whether the demonetisation, the GST or the 'high' excise duty on fuel, the effects have been felt by all. Several of the current government's decisions on the economic front have had a direct impact on the lives of the common man. Questions are also being asked if the government has tried to tinker around with too many things in a short span of four years. Some may even say that things were done in a hapazard manner without much planning and forethought.
It was also said that demonetisation and GST pushed the Indian economy backwards by many years. But, growth is now showing signs of revival, shrugging off the impact of demonetisation and GST. Under the Modi government, businesses have generally stayed optimistic about future prospects.
It would be totally wrong to say that the Modi government is going about handling the economy in an unplanned manner and that there is no long-term goal in its actions, as the opposition tries to portray it.
Widening the tax net:
Whether the GST or the demonetisation, the aim was to include more and more people in the tax bracket. The government has set for itself a Fiscal Deficit target, and that can be met only if the revenue from the taxes go up. Most transactions in India are cash-based, which makes it difficult for the government to track the money flow. Even now it is the handful of salaried people who bear the burden of paying taxes. Those who do business only by cash evade the tax authorities and the government just cannot track them.
The emphasis on digital transactions, which the government is promoting with great enthusiasm, will allow the government to monitor money flow and nab those evading the taxes. The logic is simple, more the number of people in tax bracket, more money the government will have to spend on welfare schemes.
Demonetisation: A bold move
Demonetisation was a move that could potentially have ended a Prime Minister's or party's chances of ever being voted to power again. But, barely two months after that, the BJP registered a thumping win in the assembly elections in Uttar Pradesh, the most populous state in the country. Considering the backwardness of the state, people of UP would have experienced massive inconvenience due to demonetisation, but they voted for Modi just like they did in 2014 Lok Sabha elections. The opposition parties made note ban a focus of their poll campaigns and tried to capitalise on people's annoyance due to demonetisation, but they failed and the Modi wave triumphed.
Politicians are known to try and woo the voters with their glib talk and appeasement. Seldom do they try to bite the bullet and take a decision that can cause widespread inconvenience, fearing that they may not lose their votes? Modi's note ban decision, despite knowing that it can go horribly wrong, needs to be acknowledged for sheer fearlessness with which it was taken. It may or may not have yielded desired results, but at least an attempt was made to rid the nation of long pending problems.
GDP growth is 'ok' considering the global scenario:
Four years into the government's regime, the economy, in terms of the GDP figures, is not exactly rocking. GDP has clocked in at an average of 7.3% annually between FY15 and FY18, below the 7.5% notched up in the five years prior to that. But we must consider that global economic scenario has not been great either. There has been a slowdown in global economic activity, and the current government has been able to keep Indian economy insulated from it.
The indicator for this is the stock markets. Indian stock markets have fared considerably well as compared to regional Asian peers and Wall Street - the world's largest equity markets by turnover. The benchmark equity index BSE Sensex has added about 10,000 points in the last four years breaching the key levels of 30,000 for the first time under Narendra Modi-led NDA government. The S&P BSE Sensex has gained as much as 9,970 points to 34,663 from a level of 24,693 as on 23 May 2014, before swearing-in ceremony of Narendra Modi as PM.
So, all in all, it would be wrong to say that economy has hit a rock bottom under Modi regime. It has been handled well and the focus on revenue generation for the government spending is something that would pay-off in the long run. Fuel prices are high because of the high excise duty, and that is something the government ought to look into. The government has been reluctant to reduce excise duty on petrol/diesel because it would impact the target it has set for fiscal deficit. Jaitley should now consider looking for other avenues for income than the excise duty from fuel, so that people get much-needed relief from high petrol/diesel prices.