The 2019 election sessions are going to be intense, as an estimated number of 900 million voters will decide who will hold the next parliament in India. Ever since Independence, this is going to be the first ever election that would challenge the political and economic culture of the nation. If the present government driven by Bharatiya Janta Party (BJP) and Narendra Modi secures an emphatic mandate, it would have a dangerous influence on the Indian economy.
Performance of Modi’s Government- Has it Been Any Good To India?
Financial institutions and banks are trying to cope with mountains of NPAs and this has left a dent on domestic investment and chocked credit. The response of PM Modi to entire situation is often being criticized as clumsy and piecemeal. The controversial currency ban that took place on November 8th, 2016 ended up causing miseries and affecting market growth. While, the introduction of Goods and Service Taxes (GST) in July 1st, 2017 to make India a common market has only led to business disruptions of what can be called as a shoddy execution. After all, these are the two prominent economic moves that deteriorated the political clout of PM significantly.
Apart from the implementation of GST and demonetization, the rise in unemployment rates combined with the never-ending distress on the farming industry has always kept Modi government far behind. There are over 80% of the people who work in informal, unorganized and sprawling industries with partly wages, scanty benefits and poor workspace conditions. Just a few of these jobs apparently provide security of employment, location, and income. Many studies also reveal that only 7% of Indians work in a formal economy with desired benefits.
An average voter of India is particularly concerned about basic things such as fuel prices, food inflation, and jobs, let’s analyze them individually:
- The future is only worse, as it is expected that the labor workforce will increases rapidly, with a million new job seekers entering into the industry every month. Considering the way things are going, India is set to be a two-tier economy.
- Throughout the government’s regime, Modi has rather remained lucky with prices of fuel. On an average, the price of crude oil in 2015, 2016 and 2017 stuck to $46.17 and $47.56 per barrel, but in 2018 the price saw a steep rise to $69.03 per barrel.
- Another important thing that voters should worry about is that the government has seized money in public sector banks and this happened from the ill-timed Deposit Insurance Bill and Financial Resolution
- The agricultural sector has witnessed a growth of 3 percent, compared to 6.3% seen during 2016-17 and demonetization stands to be a major reason behind it.
- A good way to make sure that farmers are able to earn a higher income is by improving the MSP or minimum support price of the crops. Still, the problem here is increasing MSP would mean flood inflation.
Is There A Ray of Hope For The Indian Economy?
For years, many economists have argued that no matter what the scenarios might be, India is the best long-term bet and that’s for a reason, it offers a diverse class of institutions that can aid in establishing and sustaining a genuine market economy. But, unfortunately, the leaders of the country have begun to undermine most of these institutions- the recent one is Reserve Bank of India (RBI) which PM Modi brought under his domination as a bid for reelections. Of all, PM Modi must realize that an election victory can never be worth taking up the chances of India transforming into a promising economy of the world.
The tension between the government and the central bank had escalated, when the finance ministry initiated discussions under Section 7 of RBI Act, through which the government can issue directions to the governor of the central bank. Few months prior to this power was used, the deputy governor gave a speech talking about the independence of RBI as a financial institution and stating that any sort of compromise would be catastrophic for the Indian economy. In the wake of these circumstances, the 24th governor of RBI, Urjit Patel resigned, serving the shortest tenure.
It’s a form of institutional regression, as this has never occurred in decades, the strength of RBI has always been in its autonomy. This is typically essential when the noisy democracy of India is taken into consideration. The long-term view, policy-making decisions based on evidence provided an integral support to the nation’s economy.
In conclusion, Modi now stands on making India an economy with profligate government and tamed central bank that overlooks the laws of economics. In 2014, the PM was elected on the grounds of providing the best governance- but was he really able to fulfill his promise? The current condition of the Indian economy itself exemplifies how costly Modi’s victory could be.
Now question arise… What will happen to Indian Economy if Narendra Modi loses 2019 elections? Will Congress make India’s future bright? Click here to know more in details.