Port Wings, 30 May 2018:
With the BJP-led National Democratic Alliance completed four years on 26 May 2018, people as well as media houses taking stock of the developments that shaped these years and could give political dividend to Narendra Modi when he will seek re-election in 2019.
In the first four years, the NDA rolled out bold and far-reaching reforms, including implementing a goods and services tax (GST), resolving toxic assets in the banking system, cutting down the oil subsidy that distorted the energy market, clamping down on black money and promoting financial inclusion.
Besides all the aura created by the pro-BJP media saying all is well in the country and NDA will sail through in 2019, there are many contradictions.
For the fact, contradictions on job creation and unemployment in India have dominated political discourse over past four years of the Narendra Modi government, and would only intensify in the run-up
The historic GST rollout also put in place a new paradigm in the federal set-up with Union and state governments pooling their sovereignty to create a single market of $2.6 trillion without regional trade barriers. The insolvency and bankruptcy code of 2016 rebalanced the rights of promoters, banks, vendors and employees.Some of the reforms, including demonetisation and GST, came with inevitable short-term disruptions for the Indian economy.
As the Narendra Modi government moves to consolidate the gains of these reforms in its last year in office in current term, Mint takes stock of the impact of these measures on both politics and the economy:
The goods and services tax (GST) has added more indirect taxpayers, made tax evasion difficult, brought tax transparency to consumers and reduced the tax rates on many mass-use goods and services. However, it unexpectedly led to a disruption in economic activity in the months before the rollout as businesses cut down production as they adjusted to the new system. This led to a slowdown in the Indian economy in the April-June 2017 quarter, but it has recovered since. Indian economy gets more formal in four years of Modi government
Though demonetisation and the goods and services tax (GST) led to a short-term disruption in economic activity, positive changes in key metrices of the Indian economy are visible over a period of time. For example, there has been a sharp increase in the number of both direct and indirect taxpayers, which is significant as the tax base and payrolls are usually taken as indicators of the formal nature of an economy.
It is the open fact that the Narendra Modi government in the run-up to the 2019 Lok Sabha elections, will look to reap political dividends out of the rural success stories when it presents its report card before the nation.