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Election Report Card: India as the World’s third largest economy

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India as the World’s third largest economy - Election Report Card
 
Election is a very important tool in democracy. It is through election that citizens of a nation choose their representatives and select their leaders. Political leaders represent different political parties which work for various goals.
In the general election held in 2014, the BJP-led NDA secured 282 seats and formed the government, making Narendra Modi the Prime Minister of India, while in the 2019 elections the number of seats went up to 303. The much-awaited Lok Sabha Elections 2024 will commence from 19th April, for which Prime Minister Narendra Modi has set a target of 370 seats for the ruling BJP and 400 seats for the NDA.
With the Lok Sabha Elections 2024 less than a month away, how to decide which political party you should cast your vote for? How to know how much work the party in power has done as against the tall claims that were made right before the previous elections?
The CSR Journal, which is known for its unbiased and fearless journalism delves into promises made versus task completed by the Bharatiya Janata Party (BJP), which is incumbent at the Centre under the leadership of Prime Minister Narendra Modi.
Following are certain promises made under the BJP’s manifesto ahead of the Lok Sabha Elections 2019. How much of the promises have been achieved in the past 5 years? Were the decisions made by the government beneficial for its people? Are citizens happy with what the government has to offer? What is the opposition saying? The CSR Journal takes a look.

BJP Manifesto – Lok Sabha 2019

Promises made by the Narendra Modi Government for: India as the World’s 3rd Largest Economy
1. Roadmap for 5 trillion dollar economy
2. Low tax and Investment driven Growth
3. Goods and Service Tax
4. Rs.100 lakh crore Investment
5. Make In India
6. Increase contribution of the mining sector to 2.5% of GDP
7. MSMEs
8. Entrepreneurship & StaUps
9. Using Tourism to Cluster Services
10. Transparent economy
11. International Trade

1. Roadmap for 5 trillion dollar economy

The Modi government embarked on a broad-based reform agenda to unleash the next wave of economic growth and propel India into the rarefied club of $5 trillion economies. A major catalyst was the slashing of corporate tax rates in 2019 to 22% for domestic companies and 15% for new manufacturing units, making India’s rates competitive globally. This was complemented by the roll-out of Production-Linked Incentive (PLI) schemes worth over ₹1.9 lakh crore across 14 key sectors to incentivise and boost domestic manufacturing capabilities. The Aatmanirbhar Bharat Abhiyan or self-reliant India mission furthered this goal through supply chain reforms, fiscal incentives and reduced compliance burdens.
Far-reaching reforms were undertaken to improve the ease of doing business and unlock economic value. The government unveiled the ₹6 lakh crore National Monetisation Pipeline to bring in private sector ownership and efficiency in operating brownfield infrastructure assets. Archaic labor laws were modernised through major codes on wages, industrial relations and social security. The historic Insolvency and Bankruptcy Code provided a time-bound resolution mechanism for stressed assets. The path-breaking Goods and Services Tax replaced multiple taxes with one nationwide levy, facilitating an efficient common market. Privatisation gathered steam with the government kickstarting strategic disinvestment starting with Air India.
The government also pushed for agriculture sector reforms with farm bills to liberalise produce marketing, allow contract farming and ease regulations on stock limits and private investments. On the infrastructure front, massive investments flowed into flagship programs like Bharatmala, Sagarmala, Dedicated Freight Corridors, UDAN scheme and smart cities. While economic challenges remain, these sweeping reforms aimed at improving ease of doing business, catalysing manufacturing, simplifying taxation and attracting investment are expected to provide tailwinds for India’s aspiration of becoming a $5 trillion economy.

2. Low tax and Investment driven Growth

One of the cornerstones of the economic policies pursued by the PM Modi government has been enabling an investment-friendly ecosystem through low tax rates and targeted incentives. A landmark reform in this direction was the reduction in corporate tax rates to 25% for companies with an annual turnover up to ₹400 crore in the 2019 budget. This brought India’s corporate tax rates on par with other Asian economies like Singapore and Malaysia, enhancing India’s allure as an investment destination.
On the incentives front, the government launched the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme in 2021 to refund embedded taxes and levies to boost export competitiveness. Sector-specific incentives like the Semiconductor and Display Fab initiatives, with incentives worth ₹76,000 crore, aimed to establish India as a global hub for electronics manufacturing. The PM GatiShakti National Master Plan was rolled out as an overarching infrastructure development program to catalyze investments through institutional coordination and seamless implementation. With an eye on improving ease of doing business, the Modi government has continually rationalized rules and regulations to reduce compliance burdens for businesses and investors.
These targeted efforts at fostering a low tax, high incentive investment climate are expected to fuel India’s economic growth ambitions.

3. Goods and Service Tax

The Modi government implemented the Goods and Services Tax (GST) on July 1, 2017, in a bid to transform India’s indirect tax landscape. GST subsumed multiple central and state levies into a unified tax system, aiming to create a common national market, prevent tax cascading, enhance tax compliance, and boost the ease of doing business. However, the GST rollout was a mammoth exercise given India’s federal structure, necessitating the formation of the GST Council comprising central and state representatives to decide rates, rules, and processes.
While GST collections have shown an upward trajectory over time, indicating stabilization, the new tax regime faced several teething issues. Technical glitches plagued the GSTN portal initially, hampering compliance, especially for small businesses. The multiplicity of GST rates ranging from 0% to 28%, along with various slabs and exemptions, added complexities and classification disputes. Frequent rate revisions and procedural changes also increased compliance burdens, drawing criticism from industry.
A major limitation of the GST has been the delayed inclusion of critical sectors like petroleum products, alcohol, and real estate within its ambit. The destination-based taxation principle raised concerns about potential revenue losses for manufacturing states. Furthermore, the GST Council’s decision-making processes have been criticized for a lack of transparency and clarity at times.
While the Modi government has undertaken periodic course corrections and rationalisation measures, debates persist on whether GST has lived up to its potential in driving economic growth, formalising the informal sector, and streamlining the tax system. Nonetheless, the government remains committed to addressing GST’s shortcomings, further simplifying the regime, and leveraging its benefits to enhance India’s overall tax ecosystem and competitiveness.

4. Rs.100 lakh crore Investment

The government has delivered commendably on its ambitious promise of driving massive capital investments, especially in the infrastructure sector. The National Infrastructure Pipeline, PM Gati Shakti, Bharatmala, and other flagship programs have provided a comprehensive roadmap and pipeline for catalyzing infrastructure investments across the country. Impressively, the total infrastructure investment between 2019-2024 is projected to surpass the targeted ₹100 lakh crore, reaching around ₹111 lakh crore.
On anchoring inflation around 4%, the Reserve Bank of India (RBI) has performed admirably through its prudent monetary policy measures. This has provided greater price stability and instilled confidence in the economy. The government’s resolute efforts through the Insolvency and Bankruptcy Code (IBC) and recapitalization of banks have helped clean up bank balance sheets and improve the health of the financial system.
The reforms undertaken to improve the ease of doing business have been wide-ranging and impactful. Game-changing measures like the corporate tax cuts, the Production-Linked Incentive (PLI) schemes across sectors, labor reforms, and the National Monetization Pipeline have significantly enhanced India’s attractiveness as an investment destination, both for domestic and foreign investors.
While the structural reduction in the cost of capital may not have materialized fully yet, the government’s initiatives have certainly created the enabling conditions for lower lending rates in the future. The improving health of banks, moderated inflation expectations, and the overall policy focus on boosting investment sentiments are positive steps in this direction. Most encouragingly, the broad-based reforms and the massive infrastructure push have laid a robust foundation for accelerating investment-driven growth in the coming years. As the global economic environment stabilizes further, India’s investor-friendly policies and strategic capability development across sectors are expected to catalyze greater private investment flows and propel the nation towards its vision of becoming a $5 trillion economy.

5. Make In India

The ‘Make in India’ campaign, launched by the Modi government in 2014, has been one of the flagship initiatives to boost domestic manufacturing and position India as a global manufacturing hub. Here’s an overview of its performance so far:

Increased FDI Inflows

The campaign played a pivotal role in attracting foreign direct investment (FDI) into the manufacturing sector. FDI inflows into manufacturing rose from $9.6 billion in 2014-15 to $21.8 billion in 2021-22, demonstrating increased foreign investor confidence in India’s manufacturing capabilities.

Sectoral Growth

Certain sectors have witnessed significant growth under the ‘Make in India’ push. The automotive sector, for instance, has seen the entry of major global players and the expansion of existing facilities. India has also emerged as a leading manufacturer of mobile phones, with the production of handsets increasing from 6 crore units in 2014 to over 31 crore units in 2021.

Policy Reforms

The government has undertaken various policy reforms to facilitate ease of doing business and make India a more attractive manufacturing destination. These include the introduction of the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), and labor law reforms.

Infrastructure Development

Recognizing the importance of infrastructure for manufacturing growth, the government has initiated several projects under the Bharatmala, Sagarmala, and Dedicated Freight Corridor programs. These aim to improve connectivity, logistics, and the efficient movement of goods.

Production-Linked Incentive (PLI) Schemes

The PLI schemes, with an outlay of around ₹2 lakh crore, have been a significant booster for the ‘Make in India’ campaign. These incentives have been introduced in various sectors, including electronics, pharmaceuticals, automobiles, and textiles, to encourage domestic manufacturing and attract global companies to set up production facilities in India.

Challenges and Limitations

Despite the progress, challenges persist in areas such as land acquisition, labor reforms, infrastructure bottlenecks, and the need for further policy reforms. Moreover, India’s trade deficit in manufactured goods has continued to widen, indicating the need for further efforts to enhance export competitiveness.
Overall, while the ‘Make in India’ campaign has yielded positive results in terms of increased FDI, sectoral growth, and policy reforms, there is still significant scope for further improvements to realize India’s full potential as a global manufacturing powerhouse.

6. Increase contribution of the mining sector to 2.5% of GDP

In 2015, the government set an ambitious target to increase the mining sector’s contribution to the country’s GDP from around 1.75% to 2.5% by 2025. As per the latest available data, the mining sector’s contribution to India’s GDP stood at around 2.1% in 2021-22. While this marks an improvement from the 1.75% level earlier, it falls short of the 2.5% target set by the government.
Initiatives Taken:

1. Mineral Exploration and Mining Policy Reforms

The government introduced the National Mineral Exploration Policy in 2016 to accelerate mineral exploration. Mining reforms like the Mines and Minerals (Development and Regulation) Amendment Act, 2015 aimed to increase transparency and efficiency.

2. Auction of Mining Leases

The government adopted an open, transparent auction process for granting mining leases, replacing the earlier discretionary allotment system. This move was aimed at curbing corruption and maximizing revenue for state governments.

3. Boosting Investment

Measures like the Atmanirbhar Bharat package and the Production-Linked Incentive (PLI) scheme for the mining and steel sector were introduced to attract more private investment in mining.

4. District Mineral Foundation

The government mandated the establishment of District Mineral Foundations to ensure the development of mining-affected areas and the welfare of impacted communities.
Challenges Faced:

1. Land Acquisition and Environmental Clearances

Delays in land acquisition processes and obtaining environmental clearances have hindered the timely execution of mining projects.

2. Infrastructure Bottlenecks

Inadequate infrastructure, such as rail, road, and port connectivity in mineral-rich areas, has posed challenges in the efficient transportation of minerals.

3. Protests and Resistance

Several mining projects have faced protests and resistance from local communities, leading to delays and disruptions.

4. Regulatory Hurdles

Despite reforms, issues related to overlapping policies, multiple clearances required, and regulatory complexities have persisted.
While progress has been made, continuous efforts are necessary to achieve the desired goal and further strengthen the mining sector’s role in India’s economic growth.

7. MSMEs

The Modi government has taken several initiatives to encourage and support the Micro, Small and Medium Enterprises (MSME) sector, which is a critical component of India’s economy. Here’s an overview of the government’s performance in this regard:

1. Access to Credit:

The government has significantly enhanced the coverage of the Credit Guarantee Scheme for MSMEs, which has helped improve access to credit for these enterprises.
The Emergency Credit Line Guarantee Scheme (ECLGS) was launched during the COVID-19 pandemic to provide collateral-free loans to MSMEs, helping them meet their operational liabilities and restart their businesses.

2. Technology Upgradation and Skilling

The number of Technology Centres (TCs) for MSMEs has been increased, providing them access to advanced technologies, training, and support services.
Initiatives like the Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE) and the Credit Linked Capital Subsidy Scheme (CLCSS) have been implemented to promote technology upgradation and entrepreneurship.

3. Marketing and Export Promotion

The government has taken steps to improve the marketing and export capabilities of MSMEs through initiatives like the International Cooperation (IC) Scheme and the Marketing Assistance Scheme.
The MSME Sustainable (ZED) Certification Scheme was launched to promote zero-defect and zero-effect manufacturing, enhancing the global competitiveness of MSME products.

4. Ease of Doing Business:

Measures such as the simplification of labor laws, the reduction of compliance burdens, and the introduction of the Insolvency and Bankruptcy Code (IBC) have aimed to improve the ease of doing business for MSMEs.
The Udyam Registration Portal was launched to facilitate the online registration of MSMEs, making the process simpler and more efficient.

5. Infrastructure Development

The government has focused on developing dedicated industrial clusters and estates, along with improving infrastructure facilities, to support the growth of MSMEs.
The Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE) has provisions for setting up livelihood business incubators and technology business incubators for MSMEs.

6. COVID-19 Relief Measures

During the pandemic, the government announced various relief measures for MSMEs, including loan moratoriums, emergency credit lines, and the restructuring of existing loans.
The Aatmanirbhar Bharat Abhiyan (Self-Reliant India Campaign) provided stimulus packages and support measures to help MSMEs recover from the pandemic’s impact.
While the government has undertaken several initiatives to support MSMEs, challenges persist in areas such as access to credit, technology adoption, and infrastructure development. However, the overall focus on promoting entrepreneurship, innovation, and the growth of MSMEs has been a priority for the Modi government, aimed at fostering economic growth and employment generation.

8. Entrepreneurship & StartUps

India’s entrepreneurial landscape has witnessed significant transformations under the leadership of Prime Minister Narendra Modi. The government’s commitment to fostering innovation, supporting startups, and creating a conducive business environment has been instrumental in driving economic growth. Following are the key initiatives and measures taken by the Modi government to encourage entrepreneurship and empower startups.

1. Startup India Seed Fund

In January 2021, Prime Minister Modi announced the establishment of the ‘Startup India Seed Fund’ with a corpus of ₹1,000 crores. This fund aims to provide early-stage capital to startups, nurturing innovative ideas and enabling entrepreneurs to take their ventures off the ground. By ensuring easy availability of capital during the critical initial phases, the government seeks to boost the startup ecosystem.

2. Removal of ‘Angel Tax’

The cumbersome burden of ‘angel tax’ had long plagued startups and angel investors. Recognizing this challenge, the Modi government simplified tax procedures and removed the tax liability associated with angel investments. This move not only eased financial constraints for startups but also encouraged investment inflow into budding ventures.

3. Ease of Doing Business

During its first tenure, the Modi government prioritized ease of doing business. Redefining the definition of startups and exempting them from tax liability were pivotal steps. The government’s commitment to simplifying compliance procedures and streamlining regulations led to positive outcomes in the business ecosystem. Over 25,000 compliances were rationalized, reducing bureaucratic hurdles for entrepreneurs.

4. Programs and Simplification

The Startup India and Standup India programs were launched to empower entrepreneurs. Self-certification for labor and environmental laws, along with simplified tax procedures, facilitated business operations. Entrepreneurs found it easier to navigate legal requirements, enabling them to focus on innovation and growth.

5. Support for MSMEs

The Ministry of Micro, Small, and Medium Enterprises (MSME) introduced several initiatives to empower startups and small enterprises. Schemes like Raising and Accelerating MSME Performance (RAMP) and Capacity Building of First-Time MSME Exporters (CBFTE) aimed at encouraging exports and providing resources for growth. By supporting MSMEs, the government indirectly bolstered the startup ecosystem.

6. Private Investment and Global Presence

India’s startup ecosystem witnessed remarkable growth, attracting venture capitalists who invested a record-breaking $48 billion in Indian companies. The government’s policies aligned with private investors’ interests, emphasizing India’s potential as a hub for innovation and entrepreneurship. As businesses seek alternatives to China, India’s leadership under Prime Minister Modi is seen as a safe haven for startups.
The Modi government’s commitment to promoting entrepreneurship and startups has yielded positive results. By creating an enabling environment, easing regulatory burdens, and providing financial support, India’s startup ecosystem has flourished. However, continuous efforts, monitoring, and effective execution remain essential to realize the vision of a vibrant entrepreneurial landscape and a prosperous New India.

9. Using Tourism to Cluster Services

Under the leadership of Prime Minister Narendra Modi, India’s tourism sector has experienced a remarkable transformation. His commitment to showcasing India’s cultural heritage to the world has yielded significant results, with a surge in tourism that has attracted millions of visitors eager to immerse themselves in the country’s traditions and treasures. Here are some key initiatives and policies implemented by the Modi government to boost India’s tourism sector:

Incredible India 2.0 Campaign

Building upon the success of the first “Incredible India” campaign, the government launched “Incredible India 2.0.” This revamped promotional campaign leverages digital media, social networking, and a renewed focus on experiential tourism to reach a global audience.

E-Visa Facilitation

The introduction of e-visa facilities has simplified the process of obtaining a visa for tourists from several countries. This move has significantly increased tourist arrivals, making it easier for travelers to explore the diverse regions of India.

Development of Tourism Infrastructure

The government has invested heavily in improving airports, railways, and road networks to ensure seamless travel experiences for tourists.

Promotion of Lesser-Known Destinations

PM Modi’s vision extends beyond the Taj Mahal and other well-known tourist spots. The government actively promotes offbeat destinations, enabling tourists to explore the hidden gems of India’s cultural heritage.

Exploring India’s Hidden Cultural Gems

Varanasi, the Spiritual Capital: Situated on the banks of the Ganges, Varanasi holds immense spiritual significance. Its winding alleys, ancient temples, and spiritual aura make it a top choice for travelers seeking immersion in Indian culture.
Jaipur’s Heritage: Known as the Pink City, Jaipur boasts magnificent palaces, forts, and vibrant bazaars. Beyond the iconic Hawa Mahal and Amer Fort, Jaipur offers glimpses into royal history and Rajasthani culture.
Mysore’s Grandeur: Mysore, with its opulent palaces, intricate silk sarees, and vibrant festivals, has become a favorite among tourists interested in exploring South India’s rich cultural heritage.
In line with global trends, India under PM Modi’s leadership has also embraced sustainable tourism practices. The focus is on preserving the environment, respecting local cultures, and providing meaningful experiences for tourists while benefiting local communities. Prime Minister Modi’s emphasis on tourism as a driver of economic growth and cultural diplomacy has indeed transformed India’s tourism landscape, inviting travelers from around the world to discover its glorious past and vibrant present.

10. Transparent economy

The Modi government has taken several steps towards establishing a transparent economy in India. Here are some key policies and their impacts:

1. Demonetisation

In November 2016, the government withdrew all 500 and 1000 rupee notes from circulation, with the aim of dealing a blow to the black economy. However, the policy led to a contraction of the Indian economy, and by 2018, around 99% of the bank notes that were made invalid had been deposited with the banking system. This suggests that a large proportion of the 500 and 1000 rupee notes in circulation were not counterfeit notes or black money, as the government thought.

2. Goods and Services Tax (GST)

Launched in July 2017, the GST policy aimed to create a common market in India, as opposed to the many different sales taxes that existed in different Indian states.

3. Government e-Marketplace

An online public procurement platform that has brought transparency and probity into the process.

4. Production Linked Incentive (PLI) schemes

The Modi government has started PLI schemes for 14 sectors, generating lakhs of new employment and self-employment opportunities in the country.

5. Pradhan Mantri Janman Yojana

A scheme launched for particularly vulnerable tribal groups (PVTGs), with an outlay of around Rs 24,000 crore.
While these policies have had mixed successes, they represent significant steps towards a more transparent economy. However, it’s important to note that the overall economic performance has been impacted by various factors, including the COVID-19 pandemic.

11. International Trade

The Modi government has made significant strides in enhancing India’s international trade relations. Here are some key areas of focus:

1. Energising Foreign Policy

The Modi government has been credited with revolutionizing and energizing foreign policy, boosting national pride, and strengthening relationships with key partners. This has helped restore India’s standing in the world and the confidence of foreign investors.

2. Strengthening US-India Ties

The relationship between India and the US has been described as “stronger, closer, and more dynamic than any time in history”. This has been attributed to the enthusiasm of the Modi government in embracing the US. The US is keen to draw India closer to act as a counterbalance to China’s growing influence in the Indo-Pacific.

3. Defense-Industrial Cooperation and Technology

The US and India have embarked on extensive defense-industrial cooperation. General Electric and India’s state-owned Hindustan Aeronautics Limited will make advanced fighter jet engines in India. This represents a greater transfer of US jet engine technology than ever before.

4. Economic Diplomacy

The government has pursued extensive trade agreements and economic partnerships to boost India’s economic growth and global influence.

5. Soft Power and Cultural Diplomacy

Cultural and people-to-people exchanges have been leveraged to enhance India’s soft power and global image.
However, it’s important to note that there is little consensus about the effectiveness of the Modi government’s management of international relations. Some argue that India’s basic strategy is unchanged and that New Delhi’s position is weaker today in important areas, notably regarding China and Pakistan.

Conclusion

As of 2024, India is the fifth largest economy in the world by nominal GDP. The top five economies in 2024 are the United States, China, Germany, Japan, and India, respectively. However, it’s worth noting that when considering purchasing power parity (PPP), India ranks as the third largest. The ranking of economies can vary based on the measurement used – nominal GDP or PPP. Nominal GDP does not take into account differences in the cost of living in different countries.

Lok Sabha Elections Report Card 2024

 

The CSR Journal