Indian economy after Modi

The Indian Economy is facing a crisis since the past 6 months. There are various reasons for this starting from US china trade war to the global economic slow down. The current economy is growing at the rate of 4.5%. This is way less than the GDP growth rate of last year in the same quarter.

There have been various economical events that has hampered the economic growth in the modi reign. Things like NBFC crisis, GST implementations and demonetisation are the major reasons why we see a downturn in the growth rate of our economy.

NBFC crisis

Due to the ILFS scam the mutual funds and other funds stopped funding to the NBFCs this shrunk the credit supply in the market. This declined the consumer demands for products and services. Thus we see how this has impacted various industries like automobile and real estate. The automobile faced a decline in the sales by 35% in November 2019. The real estate price which was considered as one of the golden investment for the wealthy ones has been at the stagnant price for like 6 to 7 years now in most of the tier 1 and tier 2 cities.

Demonetisation

On 8th of November 2016, Prime Minister Narendra Damodar Das Modi announced that since today onwards all the current notes of 1000 and 500 will be invalid. This created a kind of emergency in the whole country. The basic plan behind this step was to get the black money accumulated by the people under the purview of the system. Every person who was having the currency notes in the denomination of 1000 or 500 had to deposit the same in their respective bank account or they could also ask the bank for the change of the currency notes in exchange of currency of 100, 50, 20 or 10. But this created a panic in the minds of ill educated or unread. Cases were registered where people literally threw and burnt crores of rupees after demonetisation. Problems where faced by various sections of the society like people who were working on the daily wages, or hospital patients who were facing some serious issue but couldn't get cured because of lack of any mode of payment.

Even though the BJP leaders claim this as a success it was criticised worldwide. The step led to a decline in the terrorism in Kashmir for a short term and one could also say that the BJP could win the UP elections easily because of the Note Ban. But no other benefit could be gathered from the massive but very improperly planned step.

GST

This is one of the biggest tax reforms in the history of Indian economics. Goods and Service Tax came into picture as a replacement of earlier CST, VAT and service tax. GST was implemented to facilitate free flow and haste free trade across all the states in the country. Earlier the tax system varied from state to state. In order to manufacture a good in Gujarat and send it to Punjab would involve following the tax compliance of Gujarat, Rajasthan, Haryana and Punjab. But now with the new reform the system has become very simple and easy to implement. The problem arises because of the difference in the tax rate of various goods. Many machineries have a GST rate of 28% over them and any basic products have a GST charge 5% over them. This is creating problem in the accounting for business houses and also is creating a gap in the value chain of the goods or service.

Businesses that used to evade taxes under the former tax regime are also facing issues with the new system. Many organised business claimed that their business has decided after the implementation of GST.

Make In India

This is one of the most important campaigns run by the Modi government. India is country that is full of resources; both manpower and natural resources. Also India has the second largest population in the world making it the ideal target market for most of the companies in the world. Narendra Modi has been inviting the companies since the beginning of his first term to come and set their manufacturing houses in India. This creates multiple opportunity of the country. Since the companies would manufacture in India they would employee people leading to an increase in the employment rate of the nation. Further more it would also incentives the local producers to manufacture goods of higher standard because of the international standards. Make in India would support the development of ancillary industries in India as well.

Overall the Indian economy has reformed to be finer after BJP has come into power. Yes the current scenario doesn't seems to be supporting the 5 trillion US dollar dream of the cabinet, but one could surely support the statement that the over all business environment for the organised sector has improved a lot under the governance of Modi.