Fresh reports released by the Indian government yesterday (August 31) revealed that India’s gross domestic product (GDP) grew at a record pace of 20.1 per cent in the first quarter of FY22 — the highest-ever GDP growth in a single quarter. Today, the GST collection numbers for the month of August were released which showed a 30 per cent increase from the same month the previous year. Despite a global pandemic upending the economy of the entire planet, India under Prime Minister Narendra Modi has managed to bounce back in a relatively quick time. Hence, it can be ascertained that Modi 2.0 is a faster, much more ruthless, efficient and upgraded administrative regime that has rightfully earned the tag of having the ‘best economic outlook’.
However, unlike previous government regimes, the Modi administration did not attempt to reboot the economy without correcting the anomalies or fixing the foundation. It all started with the Jan Dhan Yojana where PM Modi took the bold decision to bring the major part of the population in touch with the banking sector.
Jan Dhan Yojana – the precursor for all things to come
The incentive was clear to the layman – simply open a bank account without depositing a penny and become part of the banking revolution. There was no compulsion to deposit a single penny but PM Modi understood that Indians by habit are likely to save and deposit money, even if it is a tiny fraction of their income.
As a result, according to 2020 data, there are over 40 crore beneficiaries of this scheme with deposits in the Jan Dhan bank accounts crossing the Rs 1.30 lakh crore mark. Imagine a simple idea of opening a bank account leading to such mind-boggling numbers being pumped into the Indian economy.
Well, PM Modi thought about it and implemented it. And much like the naysayers who laughed at him for talking about Toilets and Swacch Bharat from the ramparts of Red Fort in his first speech, PM Modi completed his mission.
In view of the runaway success of the scheme, the government in 2018 enhanced the accident insurance cover to Rs 2 lakh, from Rs 1 lakh for new accounts opened after August 28, 2018.
Direct Benefit Transfer – world’s most efficient money transfer scheme
However, the opening of bank accounts was just a stepping point for the grander scheme of things the Modi government had in the pipeline. Then came the Direct Benefit Transfer (DBT) scheme which revolutionized the way money was transferred to the public.
Former PM Rajiv Gandhi has famously remarked that only 15 paise of every rupee meant for the welfare of the downtrodden reached the poor. However, owing to the DBT scheme, not a single paisa is wasted or usurped by the middlemen.
While implementing DBT, India has efficiently used the Jan Dhan-Aadhar-Mobile (JAM) trinity. Entrepreneurs like Bill Gates, who have worked on public policy and welfare issues in countries around the world, called JAM the most sophisticated way of transferring money to citizens.
As reported by TFI, in 2016-17 alone, the government plugged leakage worth Rs. 32,984 crores through the scheme. DBT also made the transfer of MGNREGA benefits more transparent and efficient.
Recently, Union Minister Piyush Goyal announced a major reform to help farmers and consumers across the country. He has introduced a new concept which can be described as ‘One Nation, One MSP, One DBT’. While the fake farmers continue to protest at the borders of Delhi, the Modi government is extending the benefit of farmers by directly depositing the price of their crops in their bank accounts, taking out the ‘Arathiya’s’ in the process.
As mentioned earlier, Aadhar forms an integral part of the DBT scheme but it wasn’t always the case. Aadhar was introduced by the UPA regime in a rather haphazard manner and left a lot to be desired. After PM Modi took charge in 2014, his government polished the Aadhar network and extended it to every nook and corner of the country. The security threats associated with the platform were fixed and now it has become the pivot of major policy decisions.
RERA and IBC
After the Modi government took over, the Real Estate sector of the country has witnessed a revival. The housing market in the country has seen a major boost as the government brought ramifications to curb the corruption which prevailed in the real estate sector.
The Modi government brought the ‘Real Estate Regulation and Development Act’ (popularly known as RERA) to effectively regulate the real estate sector. RERA favours the consumer, unlike the earlier existing frameworks which were in favour of builders. The projects which are under RERA are completely safe and secure.
The government also amended Insolvency and Bankruptcy Code to bring home buyers on par with creditors to take care of the people who paid the money to builders but did not get the property delivered for years.
Two years into his tenure, PM Modi introduced demonetisation. Many misinterpreted the move, including armchair economists who still ignore an important output of demonetisation. The monumental step proved a big blow to shell companies, made India a more tax compliant nation and, a culture of digital payments was inculcated in the society.
Due to demonetisation, thousands disclosed their black money and paid the taxes imposed by the government. As per the government data, “3.04 lakh persons who deposited cash of Rs 10 Lakh or more but had not filed their return of income till the due date of filing returns were identified and, 2.09 lakh such identified non-filers responded. These persons paid self-assessment tax of Rs. 6,531 crores.”
Before demonetisation, the Modi government had repeatedly asked the citizens if they had undeclared assets or black money, they can deposit it without incurring any wrath of the government.
After demonetisation, the government has managed to create fear and psychosis in the minds of tax hoarders. And while the opposition tried its best to paint the move as a failure, they were served a timely reminder in 2019 when PM Modi came back with an even greater mandate.
Therefore, one may argue that economic growth slowed by few percentage points in the short term- due to the twin effect of GST and demonetisation, which were implemented in less than a year gap, it also fundamentally changed the business culture in the country. The GST revenue collection has been clocking over one lakh crore for several months, despite the pandemic and it wouldn’t have been possible without demonetisation or the introduction of the game-changing taxation system.
While the world continues to battle the China-made pandemic, India has emerged as the vaccine hub. India recently developed the world’s first DNA based vaccine and simultaneously inoculated over 1 crore vaccines on two days, within the span of a week. However, the story would not have been possible, had the western nations and in specific America under Biden not forced us to work on our shortcomings.
The Biden administration had refused to provide the raw material required for producing vaccines. As a result, India ramped up its domestic manufacturing of API’s and is now producing vaccines at a breakneck speed. As reported previously by TFI, the government had also introduced the Production Linked Incentive (PLI) scheme in the pharma sector last year to reduce dependence on the Chinese companies for raw materials.
In July, the government had notified the 7,000 crore rupees PLI scheme to promote domestic manufacturing of API or raw materials that are used to manufacture drugs. Furthermore, after receiving feedback from the industry experts, the government even removed the minimum investment limit of 400 crore rupees to seek PLI benefits.
The red-tapism that usually used to be associated with the development of vaccines has been removed. Serum Institute of India’s chairman Dr Cyrus Poonawalla, father of CEO Adar Poonawall explained the reason why Covishield was launched so quickly. He stated that there was no need for ‘maska polish’ and that the drug controller responded even after office hours, in the evening.
On behalf of the vaccine industry in India, I would like to thank and applaud Shri @narendramodi Ji, @nsitharaman Ji, for your decisive policy changes and swift financial aid which will help vaccine production and distribution in India. https://t.co/NedjaFLsx9
It is not to say the last one and a half years has been all rosy but imagining a UPA government at the helm of affairs is enough to give one shudders. While the economy bounced back with a grand 20 per cent improvement in GDP growth, the same could not have been said about the UPA where the inflation rates skyrocketed during its tenure.