How PM Modi steered India into a new league of growth and optimism.
On 8 February, 2024, Government of India came out with a white paper on the Indian economy. It made threadbare of what the Modi government had inherited and how it took enormous effort, perseverance and manoeuvring through tumultuous times to ensure that India reaches where it is today. Yet, even before the report was published, it was well known how much India has metamorphosed in the last one decade.
THE DARK ERA THAT INDIA WAS IN UNTIL 2014
Who can forget that in 2013 India was named by Morgan Stanley as part of the “Fragile Five” economies of the world? Who can forget that in 2012, there was a near 97% obsolescence in air defence systems of Indian Army? For almost one decade, since 2004, not a single major offensive weapon system was bought for Indian Air Force, especially at a time when China, along with its de facto vassal state Pakistan, had been frantically modernising its armed forces.
Major big ticket acquisition projects for armed forces were languishing for years in procedural red tapes. Middlemen had a free run, and instead of promoting Indian companies, surprisingly there was a visible propensity to import everything through global tendering. Something as basic as fast interceptor boats for Indian Navy were being imported, when the same could have easily been made in India by any Indian shipyard.
Terror attacks across major metropolitan cities were a norm than an exception. Retaliation against Pakistan for its complicity in such attacks, was almost an alien word in the corridors of Ministry of Defence then. The armed forces were, therefore, not just hamstrung by lack of modern equipment but also an indecisive and timid political leadership which was pussyfooting on bold decision making.
Yet, ironically, even at the peak of India’s cities facing the brunt of Pakistan financed terror, US diplomatic cables revealed how Rahul Gandhi had stated that Hindu extremist groups were a bigger threat for India than Pakistan’s LeT. Even as policy paralysis floundered India’s economic potential, the average Indian continued to live with the ingrained sense of inferiority that was implanted in his soul—that his dreams could only become a reality if he left India for greener pastures abroad.
India, meanwhile, remained a nation where for every 1 rupee, a mere 15 paisa was reaching the end beneficiary, and where more than 50% of people was yet to have access to formal banking. It was also a decade when India was devoid of any major structural reforms initiated by the Centre. On most occasions it was busy firefighting to defend its leaders against serious allegations of financial irregularities and promotion of crony capitalism.
Continuing with its socialistic tendency to play the role of a messiah, UPA doles out loan waivers as a concession in lieu of electoral favour. Also, affinity to India’s culture, heritage, ethos and traditions was still seen as antithesis of modernity. India remained mentally colonised, forever looking up the West for validation and guidance. Meanwhile, foreign NGOs had a field day up till 2014. Religious conversion, funding of antiindustry protests, glorification of Maoists and separatist forces were routine.
This, coupled with a near collapsing banking system, a clueless foreign policy, and an entire nation yearning to get unshackled from colonial legacies was what Prime Minister Narendra Modi inherited in 2014.
SAGA OF METAMORPHOSIS THAT BEGAN FROM MAY 2014
The year 2014 was a tipping point for India’s destiny as for the first time in its history, independent India was about to have a leader who would inspire a whole generation to aspire, to pursue their dreams in India and don the Indian culture proudly. The Modi government could have brought out the White Paper in 2014 itself. That would have saved them from lot of flak. But it would have completely eroded investors’ confidence and sovereign credibility.
The Modi government thus went on an uphill task to reboot India that PM Modi knew would take time. From 2015 onward, the cracks in the mess left behind by previous dispensation were becoming visible, especially in banking. And unsurprisingly, those who left behind the mess were the most vocal in blaming the Modi government for the same. In the words of Professor Madhav Nalapat, the first few years of the Modi government were spent in removing the debris left behind by the previous government. The real work started after that.
EMPOWERING THE DEPRIVED
Team Modi started with such programs, which no one had thought for the previous 60 years as important enough. Through Jan Dhan Yojana, Mudra Yojana and Swachh Bharat Abhiyaan, PM Modi ensured that almost half the population of India, which hitherto had no access to formal banking, sanitation or capital, now had it all.
An estimated 50 crore bank accounts were opened, 12 crore toilets were built, and 43 crore loans worth Rs 22.5 lakh crore were disbursed. In the last nine years, almost all Indian families now have a formal banking account, open defecation has mostly been eradicated, and what the middle and lower middle class always lacked, in spite of having creative ideas, i.e. access to formal capital, has been addressed.
Along with several other similar schemes that ensured all remaining villages would now have access to electricity, the Modi government was empowering a significant portion of the Indian population, hitherto impoverished, to become productive contributor to the Indian economy. The JAM Trinity (combination of Jan Dhan Account, Aadhar and Mobile) ensured that direct benefit transfer (DBT) was now the preferred option disbursing of funds of welfare schemes directly to end beneficiaries en masse, bypassing middlemen and leakages.
This resulted in beneficiaries no more getting 15% but entire 100% of welfare funds allotted to them, and Government of India thereby saving $27 billion by wiping out crores of fake names from beneficiary lists.
MILITARY MODERNISATION AT FRANTIC PACE
Meanwhile, the Modi government also went on a major military modernisation spree. The Armed Forces, deprived of modernisation for years, now saw critical deals such as those of Apache combat helicopters, Chinook tactical transport helicopters, M-777 and K9-Vajra howitzers, S-400 air defence systems, combat jets like Rafale, transport planes like C-295, as also for assault rifles, bullet proof jackets, and several more, getting materialised.
Several squadrons of Akash, Brahmos and Pinakas were ordered, and the dream of an Indian jet Tejas, which had almost reached a comatose stage, was given a new lease of life. Critical agreements such as MTCR, COMCASA, BECA, and STA, were signed by the Modi Government with major countries that would now give India access to critical technologies.
Massive boost was also given to shore up infrastructure along Indo-China border. Also, from surgical strikes to Balakot air strikes, PM Modi altered the threshold of India’s counter terror response mechanism. It was warning with clear intent that henceforth, India would hit back hard if it is hurt. And thus, when Article 370 was made inoperative in J&K, followed by it being converted into a union territory, Pakistan just barked.
It did not have courage enough to do anything more. Meanwhile, barring a few restive areas, no metropolitan city witnessed any major terror attack since the Modi government came to power. Severe clampdown also happened on various foreign NGOs known for their subversive activities in India.
CRUCIAL STRUCTURAL REFORMS
The Modi government also initiated major big ticket structural reforms such as GST, Insolvency and Bankruptcy Code Act, and Fugitive Economic Offenders Act, to name a few. PM Modi knew that structural reforms initially do create hiccups and results take time to materialise. Yet, in spite of challenges of electoral politics, he was ready to bite the bullet.
GST was preceded by demonetisation. A combination of two coupled with India’s digital boom, ensured that a significant portion of India’s informal economy was now getting formalised. Digital payments skyrocketed. At every stage when the Modi government was mocked by certain opposition parties, he proved them wrong. GST collections have reached record levels, while India’s digital payment systems have permeated all socio-economic strata to empower all.
MAKING INDIA EMERGE MORE RESILIENT THROUGH PANDEMIC PHASE
When the world was struck with once-in-a-century Covid pandemic, and many had almost written off the India story, the Modi Government showed remarkable resilience in leveraging India’s industrial scale proficiency. More than 200 crores of India-made vaccines were administered free of cost to eligible Indians.
Further, 80 crore people were being given additional free rations. He also saw to it that during those intermittent phases, more structural reforms, and investments in infrastructure were initiated. The Atmanirbhar Bharat Abhiyan coupled with Production Linked Incentive (PLI) scheme, across several sectors, became the focal point for a pivot to India policy, in the realm of making India a critical part of global supply chain of manufacturing.
In the defence sector, apart from restructuring moribund organisations like OFB, thousands of items were put in the negative import list, thereby ensuring they would, in phases, now only be manufactured in India, apart from some critical imports that may be necessitated from time to time. The entire middlemen run coterie has been dismantled and one can witness how thousands of new generation companies are now kickstarting innovation in India. Meanwhile, MSME sectors were also reformed and strengthened.
FROM FRAGILE FIVE TO MAJOR FIVE: OUTCOME OF PAINSTAKING REFORMS
As a result of a series of painstaking and critical policy initiatives, India emerged as the fifth largest economy of the world in September 2022, and is on course to become the third largest economy in the next few years with a target of breaching the $7 trillion mark by 2030. From “Fragile Five” to “Major Five”, India’s journey in the last one decade has been the result of PM Modi’s leadership that ensured a phoenix like turnaround of India. It is no more an era of jobless growth.
Even as more than 24.82 crore people have been brought out of multidimensional poverty in the last nine years, and 8 crore new entrepreneurs have been created by the Mudra Yojana, EPFO numbers too have shown steady ascent, while India remains steadfast as the third largest ecosystem for startups in the word. Even as PM Modi inaugurated the Ram Mandir in Ayodhya, followed by the inauguration of BAPS Hindu Temple in Abu Dhabi, he has ensured that India’s Vikas and Virasat can be simultaneously taken along like two tracks of a railway line, each complementing the other.
Embedding modernity, technology, economic growth with civilisational ethos, heritage, culture and philosophy has been PM Modi’s hallmark, and has created a new dimension of thought for the Global South to emulate. The journey of a mentally decolonised India has just begun.
Pathikrit Payne is a Senior Research Fellow with Dr. Syama Prasad Mookerjee Research Foundation.