The Indian economy is growing from strength to strength, since BJP-led NDA formed the government in 2014, after a landslide electoral mandate in Lok Sabha elections. There was a renewed optimism among the industries, markets and public in general about the Indian economy. The new government had a task in hand to improve the economic condition of India. In the last four years, the government has been able to cope up with the changing trends of the global economy, to stabilize the Indian economy with radical policies and measures that have had a positive impact on Indian economic growth. Although there are ailing areas of Indian economy that still need the government’s attention, with recent performance of the Indian economy, the country’s economy is set to dislodge China as the fastest growing economy in the world. The economic development in India has been hailed by economists from around the world, as the government has introduced reforms to improve the ease of doing business, control inflation, creating employment opportunities, and reducing the trade deficit to boost Indian economy.
The economic system of India
The economic system of India is a mixed economy, as Prime Minister of India Jawaharlal Nehru and his economic advisers at the time of India’s independence felt that the structure of the Indian economy cannot be a capitalist economy as the country has gained Independence recently. While on the other hand, there were apprehensions surrounding the socialist economic model, as an USSR-like economy can hamper the country’s economic growth. India decided to follow a mixed economy as the economic system of India, they felt that a combination of both economic models will push the Indian economy to greater heights while keeping the valuable resources of the nation under government’s control.
Current position of the Indian economy
The current economy of India is predicted by IMF and CSO to grow at an increasing rate of 7.5% for the year 2018-19. India has trumped China’s growth rate of 6.8%, as Indian economy becomes the fastest growing economy in the world. Indian economy is still in its early growth phase, while China, on the other hand, is at an advanced stage of growth. Although both the countries are at a different phase of growth, India’s economic growth rate can help the country to accumulate resources to counter China’s economic and military might in the region. According to the Centre for Economics and Science Research, the Indian economy is expected to dislodge Britain and France’s economy, to become a fifth largest economy of the world in terms of dollars in 2018, and by 2032, Indian economy will become the third-largest economy.
Government measures
The Indian economy was going through an unstable period under UPA II, the government was accused of being involved in multiple corruption scams, as it lost its credibility in the world market. In 2014, as soon as BJP-led NDA formed the government, the markets responded positively to the news. With a historic mandate in BJP’s favor, the investors had a renewed hope for Indian economy’s revival, ‘Brand Modi’ became a name of trust amongst world media and foreign investors. They were confident that under the stable leadership of Narendra Modi, the government will carry out reforms to address the problems of Indian economy. There have been various measures carried out by the Modi government in the last 4 years, some have had a positive impact, while some received severe criticism from media and the public of the country. Let us look at the bold steps taken by the government to strengthen India’s economy:
Pradhan Mantri Jan Dhan Yojana (August 28th, 2014)
In his inaugural Independence Day, Prime Minister Narendra Modi announced the scheme for financial inclusion in the country, to ensure access to each and every Indian to financial services such as Banking Savings & Deposit Accounts, Remittance, Credit, Insurance, and Pension. More than 300 million bank accounts were opened as public deposited 12 billion US dollars under the Jan Dhan Yojana.
Make in India (September, 2014)
Prime Minister Narendra Modi launched the program as a nation-building initiative to encourage manufacturers to produce their products in India, as the increase in production will create jobs in return. Make in India program focuses on strengthening 25 sectors of the Indian economy and encourages Swadeshi culture amongst the citizens.
StartUp India StandUp India (August 15th, 2015)
Prime Minister Modi followed up with his inaugural Independence Day speech by launching StartUp India StandUp India’ program on 15th August 2015. The objective of the program is to support start-ups around the country on the three pillars of simplification and hand-holding, funding support and incentives, and Industry-Academia Partnership, to further improve the start-up industry of the country.
Goods and Service Tax (July 1st, 2017)
The tax reform was carried out to strengthen federal tax structure within the country, as the GST is an indirect direct tax on the sales of goods and services. The tax is divided into four slabs from 0% to 28%, depending upon the category of goods and services. The initial bill faced enough opposition from the traders and small-scale businessmen, as the government implemented the law for revisionary period of 6 months. In the recent budget announcement, the Finance Minister made alterations to the existing bill. The bill with new changes has received positive reviews from the domestic as well as world media.
All these reforms have had a positive impact on the Indian economy, the credit rating agencies have upgraded India’s credit rating, as the country is undergoing massive reforms that are strengthening the economic structures of the country. The forecast for Indian economy is positive, country’s economic credibility has improved under Modi regime. Current trends in Indian economy signal towards a bright future for Indian economy, as the country is set to rival neighbouring China to become world’s largest economy.
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