The Narendra Modi-led government will enter its fifth and final year on 26 May 2018. Four years back, the National Democratic Alliance (NDA) - led by the Bhartiya Janata Party (BJP) - assumed power after defeating the Congress-led UPA government.
Over the past four years, the government has delivered the good, the bad and the ugly. New Delhi initiated various reforms. The ones that figure high on the list include the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), FDI reforms in a host of sectors, the Jan Dhan Yojana, and subsidy reforms using the Aadhaar-bank linkage programme.
However, there are areas where the Modi government has failed to make notable progress -- one example is land and labour reforms, which continue to be a major impediment for those who are looking at India to set up factories.
Also, Modi rocked the boat, literally, when he, on the evening of 8 November, 2016, announced on national television that Rs 1,000 and Rs 500 notes were to be demonetised in the next few hours, invalidating 86 percent of the currency in circulation. Modi's critics termed this as the biggest economic disaster in modern India's economic history.
After having served his home state for 10 years as chief minister, Modi, a seasoned politician, promised Indians 'acche din' and 'sabka saath, sabka vikaas' in early 2014.
Four years have passed since. Has he delivered on those promises?
Statistics are sometimes misleading. Nonetheless, it is important to look at the numbers and see what they tell us. These 10 charts show how Asia's third-largest economy fared under Modi's rule:
The Indian economy recorded a 7.3 percent average GDP growth in the four year period. That is almost flat as compared to the 7.2 percent growth recorded in the first four years of UPA II, and substantially lower than the 8.9 percent growth registered in the first four years of UPA I. It should be noted that the current government has changed the method of GDP calculations from January 2015 onwards, and the base year also changed to 2011-12 from 2004-05.
Further, sectoral classification shows that average agriculture growth was lower at 2.4 percent under the Modi government, owing to droughts in two consecutive years. The farm sector logged a near four percent average growth rate in the first four years of UPA II and UPA I.
Industrial growth was at 7.1 percent under Modi, marginally higher than the 6.4 percent logged during UPA II and much lower than the 10.3 percent under UPA I.
The services sector logged an average growth of 8.8 percent during the four years of the Modi government, as against 8.3 percent and 9.9 percent under UPA II and UPA I respectively.
As mentioned above, owing to changes in the GDP calculation method, the per capita GDP rose significantly under the current NDA regime. It averaged out at Rs 91,153 at factor cost and Rs 1,12,556 at current market prices. It was almost half those amounts under both the UPA II and UPA I regimes.
Thanks to lower international crude oil prices in the initial years of the Modi regime, the WPI inflation averaged out at 0.59 percent in the four year period. Whereas, under UPA II, the average WPI inflation for the first four years stood at 7.4 percent. Here too it must be noted that the base year for calculating WPI inflation changed to 2011-2012 under the Modi government, from 2004-05.
The primary price indicator that the Indian central bank tracks for monetary policy formulation too eased in line with WPI. Under the NDA, the average CPI inflation stood at 3.58 percent in FY18, from a high of 5.97 percent in FY15. The base year for calculation of CPI inflation also changed to 2012, from 2010, during the current NDA regime. Meanwhile, average CPI inflation was at 9.49 percent and 10.21 percent during FY14 and FY13 respectively.
Sensex and Nifty return
It's evident that stock market investors made more money under the two UPA regimes. The BSE Sensex gave an average yearly return of 10.9 percent and NSE Nifty 11.6 percent in the four years of the Modi government while it was 22.3 percent by Sensex and 20.7 percent by Nifty during UPA II and 31.4 percent by Sensex and 29.6 percent by Nifty during UPA I.
Under the current NDA regime, the Sensex logged a return of 24.9 percent and the Nifty 26.7 percent in FY15. The Sensex had a higher 80.5 percent return (Nifty 73.8 percent) under UPA II and a 73.7 percent rise (Nifty 67.1 percent) in FY06, under UPA I.
Bad loan clean-up
The RBI began the process of early identification of stressed assets in January, 2014 . That forced banks to dig out the dirt in their balance sheets, resulting in a significant jump in gross non-performing assets (NPAs), to Rs 9.62 lakh crore as of March 2018 from Rs 2.52 lakh crore as of March 2014. Nearly 90 percent of the Rs 9.62 lakh crore are on the books of public sector banks (PSBs). The emergence of back to back scams aggravated the problems of an already dented banking industry. The Modi governement, time and again, blames the earlier UPA regimes for the current banking mess.
Petrol and diesel prices
The burning issue before the Modi government is rising petrol and diesel prices. As international crude prices rose, oil marketing companies (OMCs) were forced to hike domestic fuel prices to cut losses. Over the past nine days, petrol has risen by Rs 2.51 per litre in Mumbai whereas diesel has gone up by Rs 2.58 per litre. In fact, petrol prices hit record levels in major metros barring Kolkata. Also. diesel prices hit all-time highs across the country.
The average price of petrol during the four years of the NDA regime till March 2018 stood at Rs 73.20 per litre in Mumbai, as against Rs 65.14 per litre during the first four years of the UPA II regime and Rs 47.83 per litre during UPA I.
Simlarly, average diesel prices stood at Rs 61.40 per litre in Mumbai under the Modi government, while it was Rs 45.44 per litre under UPA II and Rs 35.36 per litre during UPA I regime.
Foreign direct investment (FDI) poured into the country under the NDA regime. During the four years of the Modi government, the country received a record average $52.2 billion in FDI annually, as compared to $38.4 billion under UPA II and $18.2 billion under UPA I. The various reforms initiated by the Modi government have been rewarded by record FDI inflows.
Tax collection is the important revenue stream for any government. With robust tax revenues, a government can implement welfare programmes and infrastructure projects that benefit people. During the four years of the NDA government, the average gross tax revenue stood at Rs 15.91 lakh crore per year, as against Rs 8.36 lakh crore during UPA II and Rs 4.35 lakh crore during the first four years of UPA I.
Now, what will Prime Minister Modi do in the fifth year? The year in question will see the BJP fight several state elections, and prep for general elections in 2019. In the recently concluded Karnataka Assembly election, the BJP bagged the highest number of seats, just short of a majority. Despite winning 104 seats, it failed to form a government.
Will the Modi magic work over the next year? Will he return to power in 2019? Those are the questions staring Indians, and the global investor community, in the face.
Updated Date: May 24, 2018 19:02 PM