Under both Modi 1.0 and 2.0, India followed a trajectory of high growth relative to other major economies. Modi 3.0 needs to ensure India breaks out of the single digit trap and ensures double digit economic growth. The best way to ensure that the poorest of the poor are looked after is to ensure double digit growth. Such a rate of growth will also increase revenue receipts.
Modi 2.0 ensured that the poorer sections of society were given adequate grain and other requisites in order to escape a life of deprivation even of the basics. Such necessary attention to the poor did not bring much electoral results for the BJP in 2024. Instead, the party lost its two-term single party majority and became the leader of a coalition government so as to ensure a majority in the Lok Sabha. There are two reasons for the mismatch between success in poverty alleviation and Lok Sabha seats.
The first is that after six months, beneficiaries look at the extra benefits as their right and entitlement. Hence several do not reward the ruling party for it. The other is that additional taxation had to be levied on a small taxpayer base in order to pay for the largesse, as well as other expenses such as ensuring a healthier balance sheet for public sector banks.
As a consequence, the BJP lost ground within the small and medium taxpaying class, either through their voting for the opposition or abstaining from voting. An example of a tax structure that is prima facie regressive is the GST rate levied on the entire and not just the excess income in annual incomes of Rs 20 lakh and above. Taxpayers who kept away as a consequence would return to the NDA fold, where only the excess of income above Rs 20 lakh to be taxed with low rates, with moderately higher rates being paid by those with annual incomes below Rs 50 lakh. Such a figure annually is what is needed for a reasonably comfortable lifestyle within the middle class.
Those having annual incomes above Rs 20 lakh but below Rs 100 lakh need to be taxed at a lower rate than those having annual incomes in excess of Rs 100 lakh. In Nirmala Sitharaman, the PM Prime Minister has an able Finance Minister. In Shaktikanta Das, he has a Principal Secretary who understands both monetary and fiscal policy well. They need to ensure a plan of action designed to remove blockages to double digit growth, and once they succeed, the entire country will be the beneficiary. When he was still Chief Minister of Gujarat, this columnist wrote in The Sunday Guardian that the then CM would emerge as the Deng Xiaoping of India.
Deng ensured double digit growth for a generation in China, and so can PM Modi in India. It needs to be kept in mind that several of the blockages to growth were introduced in previous decades not to promote growth and public well-being. Rather, they were meant in order to make those being blocked from expansion through such blockages come forward to those individuals who have the means to clear such blockages, of course for a price.
Given the zero tolerance of the Modi government to corruption, the PMO working in sync with the Finance Ministry would best be able to identify such blockages and suggest remedial action to the Prime Minister and the Finance Minister. Given the importance to the country of ensuring a seamless transition from Modi 3.0 to Modi 4.0, such action would have substantial electoral impact, besides other things. Growth must not only take place, as it did during Modi 2.0, the benefits of such growth need to be tangibly experienced by the population. Double digit growth will assure such an impact. Hence, its importance by