As Indians curiously braces for the 2024 Lok Sabha elections, there has been an increase in scrutiny on the economic track record of the Modi government. So looking at the current situation at hand, wherein election fervor has been strongly gripping the nation, both the opposition and the ruling National Democratic Alliance (NDA), spearheaded by Prime Minister Narendra Modi, engage in an interesting discourse centered around pivotal issues which comprises inflation, unemployment, and economic growth.
In this midst of this political upheaval, it’s important to carry out analysis focusing on the most critical economic indicators so as to shed light on the achievements and challenges encountered by the Modi administration during its tenure. These crucial indicators include GDP growth, inflation rates, and employment figures as these parameters serve as barometers of the government's performance. This examination will not only aid voters to be informed about how their voted government has been performing but will also greatly influence the overarching narrative of the electoral campaign from a wholesome perspective.
It is important to know the government's past performance, so as to understand how competent the government has been in steering the nation through economic growth in today’s disruptive times while at the same time shaping the expectations for the future trajectory of India's economic landscape.
GDP Growth and Aspirations
The core focus of Prime Minister Modi and the BJP party as a whole has been towards an ambitious goal of steering India's GDP to the third position globally by the year 2027. Furthermore, if we compare and see when the Modi government came to power in 2014, India's GDP stood at USD 2 trillion, which positioned itself as the tenth-largest economy in the world. Post the regime change, the efforts and promising economic reforms carried out by the ruling government over the years have played a significant role in growing India's GDP to an estimated USD 3.75 trillion, thereby making it the 5th largest economy in the world today.
Now, if we look back at the Q3FY24 report, our subcontinent witnessed a robust GDP growth rate of 8.4 percent. This significantly showcases how positive the momentum in the India economy has been. However, it is always easy to say that to get it done. Hence, achieving the target of a USD 5 trillion economy by fiscal year 2028 is quite the task for any given government. The only way to ensure this is to see how we progress over the next coming years.
Furthermore, if we look at credible data from the Centre for Monitoring Indian Economy (CMIE), it reveals that India is making an average GDP growth rate of 6 percent during the tenure of the Modi administration.
Inflation Dynamics
One of the recurrent themes in Indian politics today is the Inflationary pressures that dwindle around. With rising costs of essential commodities often becoming a focal point of electoral debates, navigating inflation has been the most imperative move for the government today.
Despite efforts to rein in inflation, particularly if we see the food inflation, consumer prices have experienced upward trends in recent times. To take an instance, the overall inflation rate stood at 4.85 percent, with food inflation remaining persistently high at 8.5 percent in the month of March.
Now, if we look at how the Modi government's approach towards mitigating inflation can be the establishment of a statutory framework for the Reserve Bank of India (RBI) in 2016. So, what exactly is this framework? The answer would be the focus of the government to maintain inflation within a target range of 4 percent, while keeping a tolerance bandwidth of 2-6 percent. However, despite these promising efforts, food inflation still remains a grave concern, which has been impacting the purchasing power of citizens.
Additionally, let's look at the ability to control inflation effectively and compare between the current government post 2014 with the previous government before 2014. According to credible data, Consumer Price Index (CPI) inflation rates during the 2013 and 2014 fiscal years stood at a staggerking 10.5 percent and 9.38 percent, respectively. And if we look at the same post 2014, the average CPI inflation rates during the first and second terms of the Modi administration were 4.45 percent and 5.69 percent, respectively.
Challenges Concerning Unemployment
One of the most pressing concerns that has been plaguing India since quite the years is the state of unemployment in India. This is particularly prevalent among the youth population of the country. So, if we consider a survey conducted by the Institute of Human Development and the International Labour Organisation, there is a significant proportion - summing up to 83 percent - of the unemployed population which comprises young individuals.
According to the government employment surveys, the unemployment rate during the financial year 2013-14 showed the overall unemployment rate standing at 4.9 percent on a national level. And if we again compare the same with another credible survey (Periodic Labor Force Survey) it shows a decline in the unemployment rate to 3.1 percent in 2022 decreasing further from 3.6 percent in the year 2021.
However, the quality of employment still remains a subject of concern. For instance, data from CMIE highlight disparities in unemployment rates across educational categories. CMIE has stated that highly educated individuals, particularly graduates, face higher unemployment rates with the rate among graduates reaching 17.31 percent. In contrast, it is fascinating to see that individuals with no formal education experience relatively lower unemployment rates at 3.96 percent.
So, How can we address these challenges? To overcome the aforementioned hurdles, it will require holistic policy interventions which can drive the needed job creation, enhance skill development initiatives, and promote entrepreneurship. Another critical aspect to focus on would be to bridge the urban-rural gap/ divide. Here, the notion in this would be to ensure equitable access to employment opportunities across regions.
Let’s Wrap it Up
So to conclude, achieving the target of a USD 5 trillion economy by 2028 calls for an all encompassing effort in addressing the aforementioned challenges. As voters evaluate the government's economic track record, the forthcoming elections will definitely serve as a critical juncture in shaping India's economic trajectory for years to come.
