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Modinomics: Will it prove to be a blunder or path breaking for the Indian economy?
Many of my friends including some ardent fans of Narendra Modi (proud to be bhakts) have asked me repeatedly, what my views are on the economic blunders made by the Narendra Modi-led government which have led to the GDP plummeting to a three year low of 5.7 %.

Inside the BJP too, stalwarts like Yashwant Sinha have openly criticised the economic policies of the ruling government starting from demonetisation to implementation of the GST. Subramainian Swami had already expressed his apprehensions on Jaitley's financial policy long time back. Former RBI governor Raghuram Rajan too has asked, why the economy is derailed? Recently, the SBI chief also opined that the Indian economy was in bad shape. Even though we may say that the political motives are behind the opposition leaders' criticism, but what about the denunciation emanating from BJP's own ranks and apolitical financial experts? Is Finance Minster Arun Jaitley misleading Narendra Modi?

Well, I am not an economist who would go through the nitty-gritty of the economic policies. But I have a good habit of reading various articles published inside and outside of India. Regarding the Indian economy also, I have read a lot of articles and still continue to read. What I have noted is that there are two views. One, no doubt, being the doomed narrative.

Almost all opposition parties and the anti-Jaitley lobby inside the BJP has held demonetisation and the subsequent introduction of the GST as blunders and said that the Indian economy has crash-landed; and may not rise again unless the government gives stimulus to boost the economy. However, if stimuli are given then fiscal discipline won't be maintained and thus the economy will again stall. So, according to them, Arun Jaitley is primarily responsible for this entire economic mess.

Many have said that Narendra Modi is a dictator and doesn't listen to anyone, on the contrary, also claiming that Arun Jaitley misled him. But, how can a dictator be misled by someone?

Furthermore, before July 2017, everyone was demanding an early roll out of the Goods and Services Tax (GST) as it was perceived as a game changer. But now, the opposition says that the GST has doomed the economy!

Many unbiased economists have chronicled why they support Narendra Modi's economic policy. According to them, the GDP kept increasing for seven consecutive quarters after the Modi government's coming to power. It was only later that the GDP started sliding down. The demonetisation drive escalated the sliding process a bit more, and the difficulty in adapting to the GST system further dented India's GDP. The GDP is not expected to see growth even in the coming few quarters, as per some economists. However, they see it is as a positive sign. They strongly feel that Narendra Modi shouldn't be pressurised to give impetus affecting fiscal deficit, as it will only lead to short-term gain in the GDP rate but in the long-term, it would negate all the positive effects of demonetisation and other such economic moves which could cost Narendra Modi the next general elections. Many economists are hopeful that from financial year 2018-19, the Indian economy will become robust and equitable.

During the UPA regime too, particularly in during UPA-I regime, the GDP growth was very high but this high GDP growth (8-9.5 %) didn't generate employment as per expectations. The same happened in the first two years of Modi government's rule. Although the GDP growth was high, yet people remained jobless. What it means is that there was some serious lacuna due to which employment opportunities remained dismal. May also feel that GDP growth cannot be considered as the sole indicator of the health of an economy particularly considering the formidable size of the Indian economy.

That's why, according to these distinguished economists, demonetisation and GST were much needed structural reforms and any structural reform will have adverse effects initially. Despite Arun Jaitley's proposal to introduce stimuli for boosting the economy, Narendra Modi disapproved it to maintain fiscal discipline, which was a good move considering long-term gains. Even some foreign rating agencies too feel the same.

Now coming back to the pertinent question of whether Modonomics will turn out a boon or bane? Let us hope that the risk taken by PM Modi turns out a success. If at all it fails, what will we lose? I think nothing, as for the last seventy years the Indian economy has been reeling under problems like stress in the farm sector, unemployment, increasing gap between the rich and the poor etc.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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