When Modi assumed the office of the prime minister, it appeared that all the celestial forces had conspired to make him succeed. Unfortunately, two decisions, although well intended, went against the government, plunging GDP growth to 5.
First, the demonetization of Rs and Rs notes late last year, which had aimed to weed out black money useless, backfired. Click here to subscribe for full access.
This defeated the stated objective of the scheme. Although the government is collecting information on such illegal transactions, it will take years before the culprits are brought to book. The GST, meanwhile, was a well intended scheme to eliminate multiple tax structures by introducing a single tax.
It was felt that the GST would simplify the tax structure and encourage foreign direct investment into India. GST is a big ticket reform and will take few years before industry realizes its benefits.
Many economists have predicted that over the long term GST will translate into boosting GDP growth by at least by one percentage point. He also blamed the government for not resolving the non-performing assets of public sector banks, which has extended bad loans to several industrialists. Another criticism of the Modi government is that, even when GDP growth touched 9.
According to estimates, against the 10 million jobs needed every year, the government managed to create onlyjobs in the last fiscal year. There are two factors for this sorry state of affairs. That has adversely affected new job creation.
Modi is aware of his waning influence and is taking steps to revive the economy by introducing certain supply-side structural reforms. This took the wind out of the sails of the opposition, who were hoping that the poorly conceived demonetization effort would lead to a loss at the ballot box.
In fact, the election results exceeded even the expectations of the BJP.
Modi has ensured that essential services, like providing gas cylinders, reach people who live in distant villages. Further, Modi should also be credited with several welfare schemes like Jan Dhan Yojna, which aimed at transferring subsidies directly into the bank accounts of the poor, thus eliminating the role of middlemen, who were siphoning off a substantial part of the subsidies.
Other initiatives, like linking Permanent Account Number PAN with Aadhar, mobile banking, and skill development, will soon start yielding results and will take India on a higher growth trajectory.
In order to help public sector banks with mounting non-performing assets, the government has announced a bank recapitalization plan of Rs 2. One of the reasons for the lack of private investment is that most public sector banks had virtually stopped advancing loans to small and medium enterprises because of the drag of non-performing assets.
This will boost private investment, which has been practically stagnant for the last two years. In sum, all is not lost to the government if it takes the necessary steps to increase its investment in infrastructural projects like building roads, power projects, and creating an enabling environment for attracting foreign investment by amending the labor laws, bringing land reforms, streamlining the administrative procedures, and undertaking fiscal consolidation, to name a few steps.
Last but not the least, the present dispensation should also strive for social cohesion. The recent overdrive by cow vigilantes, who have killed several people belonging to minority groups for transporting cows with the intention of slaughtering them.(The UK is the economic slowdown in india essay fourth largest destination for exports from the.
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