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India has risen from being the world’s 10th-largest economy in 2014 to the 5th-largest now on the back of “historic” reforms such as the Goods and Services Tax and an unprecedented infrastructure push, Bernstein said in a report on the Modi government’s tenure.
In a 31-page report titled “The Decade Under Prime Minister Modi – A Deep Insight,” the brokerage firm hailed landmark reforms, controlling inflation, financial inclusion and digitization despite inheriting “a weak economy with many institutions in distress.”
“Fortune strikes overnight — for some, it’s by luck, and for most people, it’s led by years of effort. The Indian story is similar, made even more believable after the building blocks took more than a decade to solidify.
Under Modi, India has seen tremendous progress in many areas, including digitalization, formalization of the economy, a better policy environment to attract investments for industrialization initiatives and increased spending on infrastructure.
The building blocks have been laid, and although economic growth has slowed for several years in the past decade – part of that has been shedding excesses and strengthening the economy through new reform initiatives.
It is clear that the building blocks are in place for a positive Indian cycle as long as the policy continuity is in place. We remain positive in the broader markets, even as we see room for some moderation in the 2HFY24 macro, as we believe cycle width will continue to limit downside risk,” the report said.
Nine years ago, Modi was sworn in as India’s prime minister after a landslide victory with promises of “good ol’ days,” economic growth, a reduction in red waste, an end to corruption, and an improvement in business morale.
Economic prosperity, along with good governance, was at the top of the BJP’s manifesto in 2014. The promise was high growth, job creation and boosting investments.
Bernstein has studied some benchmarks to assess India’s performance since 2014.
GDP has grown at a compound annual growth rate (CAGR) of 5.7 percent since 2014, and aside from coronavirus, the growth is an impressive 6.7 percent. While it’s just a little lower than the 7.6 percent in the UPA era, that period benefited from a low base, global recovery for much of that period.
Modi’s government has “inherited a weak economy with many institutions in distress,” it said, blaming the “excesses” of the previous United Progressive Alliance government.
India has now moved to the fifth largest GDP globally from the tenth in 2014; While per capita income still lags behind at 127th, it has improved from 147th in 2014.
Notable reforms such as the goods and services tax mark this stage, and the control of inflation has also been remarkable. This has led to low increases in MSP, a lucky break in crude/commodity prices and prudent actions during COVID.
Business visualization has improved with a huge jump in the ease of business indicators.
She said that India has intensified its investments in infrastructure, supported by government spending, to avoid the mistakes of the previous stage. These investments extend from highways to the railways, ports and energy sectors.
According to Bernstein, financial inclusion and digitization has been a remarkable success story as individuals with bank accounts increased from 35 percent of the population in 2011 to more than 77 percent by 2021, thanks to the 50 crore accounts in Jan Dan opened since 2014. .
Also, direct benefit transfers have swelled to more than Rs.7 lakh crores as of FY23, from Rs.74,000 crore in FY2014.
The government has effectively used UID (Aadhaar-PAN Interconnection) to support various schemes while removing delays and middlemen. “UPI has made tremendous progress giving confidence to expand this through the digitization of e-commerce through ONDC and Fintech credit through OCEN,” she said adding access to LPG and sewerage were also vital success stories.
She added that some standards needed to be improved. Human Development Index (HDI) rankings have fallen since 2016, with the drop in scores exacerbated by reduced years of schooling during COVID. The report added that the corruption perception index remains harsh, the increase in literacy among females did not witness any substantial change, and the sex ratio in enrollment in secondary schools decreased to less than 1.
(This story was not edited by the News18 staff and was published from a syndicated news agency feed – PTI)
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