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How the Modi Government is probing to reshape India ?


  • Numerous articles have written about the economy and other aspects of India’s prospects for the future, since the Modi Government’s one year in power.
  • A relevant approach to analyze this could be, using a conceptual model and look at some recent data and key developments that have taken place in the past year, that consists of external and internal conditions of hard facts and policies.
  • Along the four quadrants of the below performance matrix, it is easy to look at the overall efforts and outcomes of the government/s and the private sector in making India.
Hard Facts Policy
  • India’s consumer price inflation (CPI) subdued to 5.01 percent (provisional) in May 2015 against 8.33 percent in May 2014. The RBI has taken cognizance of this development and has adjusted key rates accordingly.
  • Employment has bettered from May to December 2014 (2.75 lakh jobs) if one compares it to May to December 2013 (1.26 lakh jobs).
  • Sector-specific data on power also shows that a capacity addition of roughly 22,000 MW in a year – the largest in a year in India’s history.
  • Index of Industrial Production (IIP) shows that for April 2014 to March 2015 there was growth of 2.8 percent over a contraction of -0.1 percent for the same period in the previous year.
  • There is a growing recognition of making states as partners in the development process and also the states need to cooperate as well as compete to make India more competitive.
  • The power to attract investments for states also depends on competitive tax rates that are a bit higher at present at the union level.
  • The urban programme (Smart Cities, AMRUT, housing for all) will empower city leadership to become more independent in deciding the destinies of cities and their residents.
  • The railways sector that connects India, the recently released Bibek Debroy committee report is a step in the right direction for modernization.
  • The trade growth has seen a precipitous decline, over the past six months from December 2014 onwards. Imports have fallen in value terms particularly due to a commodity price collapse of crude oil.
  • India is 9th overall in attracting FDI inflows. India’s FDI inflows jumped 22 percent to reach $34 billion in 2014. India also regained the top slot in remittances with overseas Indians sending back a staggering $70 billion in 2014, according to World Bank estimates.
  • Since Modi took over, the BSE Sensex has increased from roughly 24,700 points in May 2014 to near the 27,500 points mark at present.
  • The rupee has depreciated from 59 to a dollar in May 2014 to roughly 63 at present.
  • India’s increasing foreign engagement where it remains a beneficiary of official bilateral aid and pledges of investment as well as a donor – as in the recent case of Nepal.
  • The reform process has to be pursued more aggressively and quickly by opening up sectors of the economy and also looking Central Public Sector Enterprises in a strategic manner.
  • More reform is certainly needed in sectors like grain storage and coal that are dominated by government monopoly.
  • Foreign Policy magazine’s Baseline Profitability Index points to India being the top destination for investment in 2015.


  • Though it is visible that India is not extremely competitive at present but is bettering its economic prospects.

Source: ET

About Arvind Kumar

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