India: Three and a Half Years of Modinomics

In May 2014, a new government led by Prime Minister Narendra Modi took office in India. In three decades, this was the first government to win an absolute majority in the Lok Sabha, the Lower House of the parliament. It was also the first time in India’s history that the winning candidate had contested the national election predominantly on the platform of economic development. “Sabka Saath, Sabka Vikas,” which translates as “Collective Effort, Inclusive Development,” was the catch phrase Modi used to capture the imagination of the voters. After three and a half years under what has come to be called Modinomics, where does the Indian economy stand? Although Indian print and electronic media ceaselessly run debates on different economic issues, we lack a unified account and assessment of the progress made by the government. The present paper attempts to fill this critical gap. In Section 1, I begin with a brief account of the economy following the 1991 economic reforms with special attention paid to its state just before the Modi government took office. In Section 2, I discuss the overall performance of the economy including the GDP growth, macroeconomic developments and progress in attracting foreign direct investment. In Section 3, I offer an account of the key process and policy reforms introduced by the government. The discussion here shows that this has been a very active government, seeking change in wide variety of areas. In Section 4, I assess the criticisms of the government in three key areas: lack of robustness of growth; poor record of job creation; and ill effects of demonetization. In Section 5, I conclude the paper