One Year of Modi Administration - How Much Has The New Indian Government Actually Delivered?

[Chanakya's_Chant]

One Year Later, India In Better Shape Under Modi​

By Kenneth Rapoza, Forbes

India is in better shape under new prime minister Narendra Modi. Consensus has spoken.

Modi stormed into parliament last May in a landslide victory. His BJP Party took it to the ruling Indian National Congress, getting majority rule in the parliament, and promising more social inclusion while developing a woefully under-developed economy. India is far and away the poorest of the BRIC countries. The develop it requires lots of changes to the regulatory environment, and land law changes. Meanwhile, Modi and his government must be mindful of the large number of poor in the country.

On the market side of things, India is on the right track.

India’s macroeconomic health has improved over the last 12 months. Two years ago, the country was called a “gasping elephant” by an HSBC analyst. Today, it’s not a stampede by any means, but it is a much healthier family of pachyderms. India’s growth rate is expected to surpass China’s this year in percentage terms. If all goes according to the government’s base case scenario, Indians can expect a 7.4% growth rate, according to government estimates. The World Bank estimates it at 7.2%, which still puts India ahead of China, the world’s No. 2 economy after the U.S.

If numbers are your thing, India looks pretty good.

Indian Prime Minister Narendra Modi has been running the country for near a year now. He has made it one of the favorite nations of emerging market investors. But the next 12 months will have the market, and the locals, hoping he can execute on his development programs. (AP Photo/Manish Swarup)​

GDP growth in the September-December quarter was 7.5% compared to 6.6% a year ago. Most of this is due to a methodology change by the government number crunchers, so this is why India looks “pretty good” and not great. There is a lot of faith in Modi right now. It has not waned much.

Then there is India’s central banker Raghuram Rajan. The market is confident in Rajan, who took over the Reserve Bank of India in September 2013. Both have put India on a healthy diet and exercise regime. Most people will say it is paying off.

But investors shouldn’t get overly bullish, warns Indian-American Krishna Memani, chief investment officer at Oppenheimer Funds in New York.

“The fact that Modi has a political mandate doesn’t make it any easier to get policies to pass the legislature,” he says. “The right way to think about India as an investor is to buy it when it is everyone’s least favorite country. Going to India today thinking that you’re going to make a a lot of money is a bet that everything will work out according to plan. Odds are higher than last time, but maybe the market is ahead of themselves.”

Companies are believers, even if the data is not exactly perfect.

General Motors is losing money in India. But unlike Russia where it recently closed an assembly line, the Detroit auto-maker predicted that India will be its third largest market in the next 10 years.

“India has gained back confidence, especially after Modi’s election,” Stefan Jacoby, GM’s chief of international operations, told Reuters on Sunday. “We’re pretty optimistic. We see growth potential in India,” he said.

Modi recently launched a program to promote micro-lending and savings in India. The country is one of the creators of the micro-lending movement, but now Modi is taking it one step further. His goal is to get every household to open a bank account.

Reserve Bank of India Governor Raghuram Rajan is the Robin to Modi’s Batman. He has done a good job at handling inflation and keeping the rupee stable against the dollar. (AP Photo/Rajanish Kakade)​

The Reserve Bank of India (RBI) allowed people to open small accounts, relaxing some of the rules and restrictions. In an informal economy the size of India’s, many people don’t have any documentation of their existence. So one change was allowing for those who don’t have official support documents to open small accounts using a home shot photograph of themselves and getting finger print on the image in the presence of a bank official. For the government, this is one step in financial inclusion, another stop in connecting the country.

In India’s superhero leadership, Modi is Batman and Rajan is the Boy Wonder, Robin.

Rajan has oil and gold to help for his inflation numbers. But regardless of commodity prices, Rajan has overseen a stabilization of the rupee and a decline in consumer prices to 5.17%, well below the 8.3% at the same period a year ago. Whole sale prices fell to 2% from 6% a year ago.

The fiscal deficit is also improving. The deficit is 4.1% of GDP, with Rajan gunning for around 3.9% this year. He’s close. Rising oil prices will make it harder going forward.

India recently finished its fiscal year. A new year has begun. And this coming fiscal year may not be as sexy as the last.

The Economic Times wrote in an editorial published Monday that “unless the government delivers more fully on its development platform and our macro numbers improve dramatically…the Modi government will not find many willing to give it the benefit of the doubt. The second anniversary will be distinctly less cheery than the first.”

Source:- One Year Later, India In Better Shape Under Modi - Forbes

 

[deckingraj]

One thing for sure they have not achieved is marketing their successes well....there is a perception being created and i am not sure if those are getting countered efficiently...Vajpayee lost 2003 elections even though his 5 years created record number of jobs and even 10 years of congress could not beat his infra figures....yet they lost badly!!

Also within its first year Modi govt has again dwarfed infra figures of congress regime....Anyhow these are early years but Modi should keep that debacle on back of his mind.....

 

[Echo_419]

One thing for sure they have not achieved is marketing their successes well....there is a perception being created and i am not sure if those are getting countered efficiently...Vajpayee lost 2003 elections even though his 5 years created record number of jobs and even 10 years of congress could not beat his infra figures....yet they lost badly!!

Also within its first year Modi govt has again dwarfed infra figures of congress regime....Anyhow these are early years but Modi should keep that debacle on back of his mind.....

Agreed they should market thier sucess more efficiently

 

[Chanakya's_Chant]

One thing for sure they have not achieved is marketing their successes well....there is a perception being created and i am not sure if those are getting countered efficiently...Vajpayee lost 2003 elections even though his 5 years created record number of jobs and even 10 years of congress could not beat his infra figures....yet they lost badly!!

Also within its first year Modi govt has again dwarfed infra figures of congress regime....Anyhow these are early years but Modi should keep that debacle on back of his mind.....

Achievements of the central government have been well advertised and marketed - the opposition comes nowhere in comparison to Modi's outreach to the commons through various platforms including social media and radio and television broadcasts. No other politician in the past or in the present for that matter comes close to Modi in media management and public outreach!

As far as NDA vs UPA is concerned - UPA scores above NDA on one of the 10 parameters (GDP growth), is level on one other parameter (fiscal deficit) while NDA does better than UPA on the remaining eight parameters. - Vajpayee lost due to poor marketing for sure - his government was way better than the UPA.

NDA v UPA: Close encounters with facts
Minhaz Merchant in Times of India

Which government – UPA or NDA – has been better for India’s economic and social indicators? Dismiss the rhetoric and stick to the facts. In this analysis, I’ve chosen 10 key parameters. They cover both economic and social criteria.
1.GDP growth: Average GDP growth in 1998-2004 (NDA) was 6% a year. Average annual GDP growth in 2004-13 (UPA), up to June 30, 2013, was 7.9%.

Caveat 1: The Vajpayee-led NDA battled US-led economic sanctions following the Pokhran-II nuclear test in May 1998. It faced a short but expensive Kargil war in 1999 and the dotcom bust in 2000. When it took office, it had the lag effect of the East Asian financial crisis of 1997-98 to contend with.

Caveat 2: The UPA government, in contrast, benefitted from the economic momentum of the high (8.1%) GDP growth rate of 2003-04 – the NDA government’s final year – and rode that wave. The global liquidity bubble in 2004-08 bouyed foreign mflows, helping UPA-I achieve a high GDP growth rate in its first term. The Lehman Brothers collapse in September 2008 did hurt the Indian economy but the ensuing US Federal Reserve asset buying programme attracted a steady flow of near-zero interest dollars into India from 2009.

Despite these caveats, the UPA government’s average annual GDP growth rate of 7.9% in 2004-13 clearly scores over the NDA government’s average annual growth rate of 6% (though high inflation boosted the former significantly). First strike to UPA.

2. Current Account Deficit:
2004: (+) $7.36 billion (surplus).
2013: (-) $80 billion.

The winner here is clearly NDA. It ran a current account surplus in 2002, 2003 and 2004. Under UPA this dipped into deficit from 2006 and has spun downwards since.

3. Trade deficit:
2004: (-) $13.16 billion.
2013: (-) $180 billion.

Again, advantage NDA.

4. Fiscal deficit:
2004: 4.7% of GDP.
2013: 4.8% of GDP.

Not much to choose between the two.

Caveat: This extract from the Asian Development Bank Institute (ADBI) report, published in 2010, explains why and when the UPA government’s fiscal defict began to spiral out of control.

“The central budget in 2008–2009, announced in February 2008, seemed to continue the progress towards FRBM targets by showing a low fiscal deficit of 2.5% of GDP. However, the 2008–2009 budget quite clearly made inadequate allowances for rural schemes like the farm loan waiver and the expansion of social security schemes under the National Rural Employment Guarantee Act (NREGA), the Sixth Pay Commission award and subsidies for food, fertilizer, and petroleum.”

“These together pushed up the fiscal deficit sharply to higher levels. There were also off-budget items like the issue of oil and fertilizer bonds, which should be added to give a true picture of fiscal deficit in 2008–2009. The fiscal deficit shot up to 8.9% of GDP (10.7% including off-budget bonds) against 5.0% in 2007–2008 and the primary surplus turned into a deficit of 3.5% of GDP.

“The huge increase in public expenditure in 2008–2009 of 31.2% that followed a 27.4% increase in 2007–2008 was driven by the electoral cycle with parliamentary elections scheduled within a year of the announcement of the budget.”
The recent announcement of the Seventh Pay Commission comes again, not unexpectedly, at the end of an electoral cycle.

5. Inflation:
1998-2004: 5%.
2004-2013: 9% (Both figures are averaged out over their respective tenures).

Advantage again to NDA. Inflation under NDA was on average half that under UPA, leading to the RBI’s controversial tight money policy, high interest rates and rising EMIs.

6. External Debt:
March 2004: $111.6 billion.
March 2013: $390 billion.

The UPA suffers badly in this comparision, a result of lack of confidence in India’s economy and currency following retrospective tax legislation and other regressive policies, especially during UPA-2.

7. Jobs:
1999-2004: 60 million new jobs created.
2004-11: 14.6 million jobs created.

Clearly, the UPA’s big failure has been jobless growth – a bad electoral omen.

8. Rupee:
1998-2004: Variation: Rs. 39 to 49 per $.
2004-13: Variation: Rs. 39 to 68 per $.
(Rupee rose from 40-plus to 39 between October 2007 and April 2008.)

The NDA government’s economic and fiscal policies, despite the various crises of 1998-2000 pointed out earlier, evoked more global confidence, leading to a relatively stable rupee (Rs. 10 variation) compared to the Rs. 29 variation during UPA’s tenure.

9. HDI:
2004: India was ranked 123rd globally on the human development index (HDI) in 2004, with a score of 0.453.
2013: India has slipped 13 places to 136th globally on the HDI in 2013 with a score of 0.554.

10. Subsidies:
2004: Rs. 44,327 crore.
2013: Rs. 2,31,584 crore.
Here again, profligate welfarism, as the ADBI report quoted earlier shows, has led to a rising subsidy bill. Worse, a significant amount is siphoned off by a corrupt nexus of politicians, officials and middlemen.

Conclusion: UPA scores above NDA on one of the 10 parameters (GDP growth), is level on one other parameter (fiscal deficit) while NDA does better than UPA on the remaining eight parameters.

The next time Finance Minister P. Chidambaram wishes to stage an encounter with facts, he would do well to be aware of those facts.
Sources: Economic Survey of India, UNDP, IMF, Planning Commission of India.

Unpopular Opinion: NDA v UPA: Close encounters with facts

 

[saurav]

Get Jaitley out of MoF... He is a lawyer and has started to behave like one. Media management has been terrible. Unless this is given to someone other than Jaitley and his cronies, nothing will improve on this front.

 

[Chanakya's_Chant]

Some interesting infographics -

 

[jaiind]

This current govt is much better than earlier govts.. Mr.Modi planted seeds,obviously takes time to get fruits.. he has taken 15 years to bring some shape to gujarath.so he needs more time to make new India at global market.

 

[Chanakya's_Chant]

Other major achievements -

(01) India's foreign exchange reserves at record high of $344.6 Billion -
India's forex reserves touch record high at $344.6 billion - The Economic Times

(02) Firm action against black money holders - 121 HSBC account holders booked apart from others till date with $1.6 Billion being recovered as penalties -
Govt to net Rs 10,000 crore from Swiss bank accounts by March-end: SIT - The Times of India
Black money: 121 HSBC account holders booked - The Times of India

(03) Together with Rajan he is credited for India's economic turnaround -
India 'best EM turnaround story on planet': Nomura - Moneycontrol.com

(04) A "Superhit" foreign policy -
Foreign policy of Narendra Modi - Wikipedia, the free encyclopedia

Grading 10 top world leaders | Harvard Gazette​

 

[AHAM BRIHMASMI]

they are giving advertisements worth of billions.

One thing for sure they have not achieved is marketing their successes well....there is a perception being created and i am not sure if those are getting countered efficiently...Vajpayee lost 2003 elections even though his 5 years created record number of jobs and even 10 years of congress could not beat his infra figures....yet they lost badly!!

Also within its first year Modi govt has again dwarfed infra figures of congress regime....Anyhow these are early years but Modi should keep that debacle on back of his mind.....

I am a big fan of Modi, but being a traditional land tiler I can safely say that Modi has delivered all the Indian land to the industrialists and corporates. increasing your growth rate is a curse if it is increasing rich's money and poor's poverty at the same time. All the infrastructure is developed for corporates only, if it would had been developed for poors then toll charges would not have been in 100s and 200s.

 

[Randhawa]

1.Uranium Supply deal with Canada

2.Rafale deal with france

3.Renewal of Military cooperation with US.

4.50 billion $ investment from Japan and China.

5."Befitting" Response to Adversaries

 

[Guynextdoor2]

 

[Chanakya's_Chant]

they are giving advertisements worth of billions.

For election campaign - yes they do like any other party - though official advertisements through Government of India are more or less the same as in the UPA regime -

As far as the land bill and infrastructure projects are concerned - What the Modi government’s land bill aims to do is make the acquisition of land for infrastructural projects easier by moderating some of the restrictive provisions in the previous land acquisition law of 2013.

Standard Chartered Bank had estimated that if land buyers have to mandatorily obtain consent of 80% of landowners, as stipulated previously, the process would typically take 4-5 years. No wonder then that infrastructure projects worth over $100 billion remain stalled, robbing the economy of millions of potential jobs.

As it is, India is ranked 142nd out of 189 countries in the World Bank’s ‘Ease of Business’ list. Persisting with such restrictive rules would spell disaster for the government’s efforts to kick-start the investment cycle and catapult India to a strong growth trajectory.

Counter with your arguments - don't spark a troll war around - you have that "poor" option for a reason.

 

[Abingdonboy]

Commendable:

- Fast tracking many infra projects
- Every economic measure points to an improvement in the past 12 months whether that is 100% attributable the new GoI is debatable but the fact remains
- A far more assertive foreign policy
-Marketing "brand" India has been a major success- India is now back on the international community's mind for all the right reasons


Could do better:

- A lot of loud mouths both within the GoI/BJP and their fringe elements have caused highly unnecessary and distracting media storms
- A lot of noise around defence but little tangible evidence - a HUGE list of pending deals, OROP still waiting to be implemented, 3 new tri-service commands STILL not cleared, no new DPP etc


It is still early days, a year in power is NOTHING, Modi needs at least 5 years to implement widespread reform and bring about lasting improvements. As it stands India will be growing at 8.6% from next year, GST and other reforms are in the pipeline and infra projects are being pressured with renewed vigour. Things are certainly looking good, let's just hope Modi keeps up his early enthusiasm for change.

 

[nair]

If you look at Modi as PM
1) Modi Marketed him very well during the election campaign (It was more of Modi wave)
2) Modi marketed him very well abroad after his victory (It was more of Modi than the new NDA govt)

My take on Modi Govt

1) He formed the govt when things were pretty bad
2) He successfully managed to change the mood in the country
3) He Successfully changed the mood in the industry
4) Economy growth trend was reversed and brought back to positive (though there is a confusion on the new method)
5) He has good control over the govt which previous govts lacked......

The overall performance was satisfactory/good, and with the given scenario, you cant expect more ........ But the real test is going to come in coming years, as the new policies and its result will start coming and that is when we can start analysing the actual performance........

Failure :

1) Could not stop the idiots of NDA/partners from making idiotic statments, and their comments were discussed more than the actual development.......

 

[Star Wars]

Could do better:
- A lot of loud mouths both within the GoI/BJP and their fringe elements have caused highly unnecessary and distracting media storms
.

Majority of that is media fabricated nonsense. News gets reported then 2-3 days later gets taken down.

Failure :
1) Could not stop the idiots of NDA/partners from making idiotic statments, and their comments were discussed more than the actual development.......

Of course, Indian Media.. What do you expect.