“Reform, Transform and Perform”- PM Narendra Modi. India overtakes UK and becomes fifth largest economy.
India becoming 5th largest economy overtaking UK economy at a time of celebration of 75 years of independence from British colonial rule is a pride moment for every Indian. The significance being India was able to achieve such progress amidst crisis of Covid and Russia -Ukraine war. India is expected to attain 3rd position by 2029.Bloomberg analyzed the data of International Monetary Fund and prepared the report. US remains world’s largest economy with highest GDP followed by China, Japan, Germany and India. India was in 11th position of GDP in 2014. In 10 years, India made significant progress ranking 5th with GDP of 854.7 billion dollars.
India Ahead while world recedes
Many of developed countries are facing inflation and economic recession. GDP of UK stands at 816 billion dollars. Inflation hit a record level in UK. UK recorded just 1% growth of GDP in second half of financial year of 2021-22. China is facing real estate, banking and financial crisis. Europe is having highest inflation, climate crisis and facing economic recession. The depreciation of pound value of Uk, yen of Japan, Yuvan of China, Euro and other currencies are more compared to depreciation of rupee with dollar.
India is the fastest growing economy at present. In April-June quarter of FY 2022-23 India recorded a growth of 13.5 % in GDP. After covid crisis and relaxation of covid protocol guidelines, there was spurt in consumption and demand in all fields, especially in service sectors. Contribution of India to GDP which was 2.6% in 2014 increased to 3.5% in 2022 and is expected to rise to 4% by 2027.At this growth rate India is anticipated to overcome Germany by 2027, Japan by 2029 and become 3rd largest economy by 2029.
The Fragile Five to top Five
When Modi became the prime minister of India in 2014 India was in top 5 fragile economies – The group of “Fragile Five” alongside of Brazil, Turkey, South Africa and Indonesia. The policy paralysis of UPA government was responsible for double digit inflation, bad impact in business confidence and economic recession. The fragile five had bad current account deficit, lesser foreign exchange reserves, more external debt, crash of rupee value, higher double-digit inflation above 10% and a slump in growth to below 6%. Investors were moving money out of India, mainly into USA and the currency value was falling. It was not an easy path for Modi government.
With a strong determination to set right Indian economy Modi government took various measures and steered country on a right path resulting in more stable currency, falling inflation rates and a well-controlled fiscal deficit. All these actions made India a better place to invest in. Within 1000 days Indian GDP growth rose to 7.4%, highest among large economies of world. By 2017, India was dropped off the list of Fragile Five and became fastest growing economy. India was referred as the “bright spot in the gloomy global economy” and a macro sweet pot. India’s stocks and currencies performed better than most of the world’s largest economies. It was clearly predicted in 2017 that “Due to changes in its political structure, India is on the rise as an economical power and is not likely to return to Fragile Five status”.
Policies of Modi government
Make in India
Government has made constant efforts to incentivize domestic manufacturing, as compared to import and sell model. “Make in India” initiative was launched on September 25th 2014. Concessions were provided on import of raw materials needed for manufacture in India. Customs duty has been increased on some finished items to encourage domestic MSMEs. “Vocal for Local” initiatives exposed India’s manufacturing domain to world. “Start UP India” scheme was launched with a corpus of Rs.10000 crores to meet funding needs of Start- Ups. India now ranks 3rd in global start up ecosystems with more than 4200 new-age companies.
The government liberalized investment restrictions, eliminated regulatory barriers, nurtured international relations and improved business relations. India jumped by 79 positions in 5 years (2014 to 2019) from 142nd to 63rd place in ease of doing. FDIs (Foreign Direct Investments) have increased across various sectors. In FY 2021-22 FDI have been reported from 101 countries. India received highest ever FDI inflow of Rs 6,31,050 crores in FY 2021-22.
Tax Reforms
Goods and Service Tax (GST) was the biggest ever tax reform and game changer of Indian economy. Over 17 taxes and multiple cesses were subsumed into GST combining central taxes like excise duty, services tax and state taxes. GST simplified and replaced the complicated indirect tax system and increased the compliance and number if indirect tax payers and made them more accountable. It also created a unified common national market for India boosting foreign investment and “Make in India” campaign.
Reduction of corporate tax for domestic companies and new manufacturing firms costing government around Rs 1.45 lakh crores was another major reform for “Make in India” making India country with lowest tax rates in Asia. Reforms in Income Tax resulted in simplicity in filing and increased compliance. India recorded highest ever Income tax collections of 13.63 lakh crores and around 5.83 crore IT returns in FY 2021-22 despite covid pandemic.
Welfare with Development
PM Jan Dhan Yojana scheme was launched in September 2014 and 44.23 crore bank accounts were opened for poor at zero balance. Benefits like subsidies, scholar ships, pensions and covid relief funds are being credited to the bank accounts including Jan dhan accounts through Direct Benefit Transfer. “Digital India” scheme increased digital literacy in citizens, digital infrastructure and digital delivery of government and non-government services. UPI (United Payment Interference) UPI transactions stood at 73 lakh crores in 2021 and the value is increasing every year significantly. In July 2022 UPI transactions value stood at 10.63 lakh crores.
Over 3 crore houses were built for poor under PMAY scheme with over 4.47 lakh crore rupees since 2015.Over 10.9 crore toilets were built under Swachh Bharath Mission since 2014. Seven crore rural families were given piped water connections in 3 years since 2019 through Jal Jeevan Mission which was budgeted at 3.6 lakh crores. The important point here is schemes of Modi govt provided necessary amenities to the under privileged in a useful way which created jobs and put money in to hands of people along with improving quality of lives of deprived.
MUDRA scheme was launched by Modi government on 8th April 2015 to provide loans up to 10 lakhs to non-corporate non-farm small and micro enterprises in hassle free manner. Since launch over 34.42 crore loans worth Rs 18.6 Lakh crores were sanctioned through MUDRA.
Infrastructure
Since 2014 ,157 medical colleges were allotted by Modi government which are under different stages of implementation. In 2014 -2019 2 lakh kms of rural roads and 35000 kms of highways were built. 100 airports were made operational by 2019 and government is planning to make 200 airports, heliports and water ports operational in next 3 to 4 years. Hundreds of railway stations were modernized and 400 to be done next. National Infrastructure Project was devised for 5 years from 2020-2025 with Rs 111 lakh crores to provide world class infrastructure and improve quality of life. Money spent on infrastructure created jobs giving money to people and increasing the spending capacity.
Agriculture
India is agriculture-based economy. Various schemes were launched to support farmers in Modi regime. Through PM KISAN Rs 6000 amount is being transferred to farmers every year. Subsidies on Urea, saplings, seeds were given. Through PM Krishi sanchay yojana, SAUBHAGYA various equipment like drip sets, bore wells and solar panels were given. Rs 1.25 lakh crore was allotted for developing infrastructure for agriculture like ware houses, cold storages and rural roads. Kisan rail and Krishi Udaan helped faster delivery of perishable goods. Food produce organizations were developed with Rs20000 crores.
Atmanirbhar Bharath
Entire world grappled with covid. Modi government launched “Atma Nir Bhar Bharath” worth Rs 20 lakh crores to turn crisis in to opportunity. ECLGS scheme sanctioned collateral free loans amounting to Rs3.48 lakh crores benefitting nearly 1.19 crore MSMEs. Through PM Garib Kalyan Yojana, largest food security program in world, 5kg cereals and 1 kg pulses per person were provided to 80 crore poor from March 2020 till today.
Money of Rs 500 was transferred per month to women having Jan Dhan accounts during lock down. Over 200 crore covid vaccine doses were given free of cost to citizens. PLI (Production Linked Incentives) scheme aimed at offering Rs 2.4 lakh crore incentives in key businesses manufacturing in India has got good response from electronics, auto components and pharma and is expected to add 4% annually to India’s GDP. One example being mobile manufacturing units went up from 2 units in 2014 to 200 units in 2021 and production from 6 crores in 2014 to 30 crores in 2021.
Way ahead to Vishwa guru
Modi government inherited India as a part of Fragile Five in 2014. India is now 2nd largest manufacturer of mobile handsets. India recorded highest ever merchandise export value of nearly Rs 53 lakh crores (676 billion dollars) in 2021- 2022. From just being importer India is now exporter of defense equipment with exports of Rs 13000 crores in 2021.India’s agricultural exports crossed Rs 3.95 lakh crores registering 19.92 % growth. Fiscal consolidation in budgets brought down fiscal deficit to 3.2% and current account deficit to 1%. From having meager forex reserves in 2014, India became the fourth largest forex reserve holder as of December 2021 ahead of China, Japan, and Switzerland. On 4th June 2021 India became 5th country in the world to have Forex reserves exceeding 600 billion dollars.
Those who heckled about usage of UPIs by coconut vendors now realize that coconut vendors to car vendors are using UPI services easily. Manufacturing growth, Inflation, Fiscal deficit, forex reserves, FDIs showed better performance in 2014 -2019 than 2009-14. Modi government has ensured the welfare of needy along with development Welfare measures were designed to boost development and vice versa development to boost welfare. India has now become fastest growing and fifth largest economy in the world. This transformation happened in just 6 years. Determined India now aims to become Vishwa guru.
Dr Vinusha Reddy
State executive member, State Media Panelist and State In charge of Policy & Research Mahila Morcha
BJP Andhra Pradesh