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Reviewing the long and winding path of development tread by the Modi government

As Prime Minister Modi led NDA government in India completed four years recently and enters its last lap, below is an analysis of the long and winding path of development that the Modi government has walked.

Focus on Infrastructure Development:

Project Bharatmala is building 35,000 km highways across 16 states, including 9,000 km of economic corridors, which will enable faster movement of goods and dramatically reduce supply chain costs from the current average 18% to 6%. Project Sagarmala is modernizing 12 major ports and 185 minor ports along the entire 7,500 km long coastline of India, which would stimulate trade and provide logistic costs savings of over Rs. 35,000 crores per year. This Bloomberg report calls out India for building new roads at a breakneck pace and this business report enumerates how Metro networks are expanding across India. Construction started for “Navi Mumbai International Airport”, Jewar International Airport, Noida to reduce the load on currently saturated Mumbai and Delhi international airports and 22 new airports in North East alone to improve connectivity.

Per Finance Minister Mr Arun Jaitley, between last year of Congress-led UPA government and current year of BJP-led NDA government, the infrastructure expenditure has increased by 134% and the road sector itself has witnessed an increase by 189%.

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Finance & Economy:

In 2014, Congress government had left a mountain of Bank NPAs which had blocked the capital and choked country’s industrial growth. BJP introduced IBC (Insolvency and Bankruptcy Code) is effectively addressing bad loans worth INR 10 lakh crores ($150 billion). With three of the largest cases already resolved and many more scheduled to be resolved by 2019, a large chunk of capital has started returning to the system. The impact is huge and has been explained in detail in this article.

GST (Goods & Services Tax) was successfully rolled out as India’s largest Tax reform since independence that transformed entire country into a single market. Congress had struggled for more than 10 years to roll out the reform over revenue concerns raised by Maharashtra (Congress ruled), Tamilnadu (non-BJP), Odisha (non-BJP), Kerala (non-BJP) and most of the other states. Since the rollout of GST, the number of indirect taxpayers has increased by 50% and direct tax collections have surged significantly to an all-time high.

Government initiatives on Aadhaar linkage and Direct Benefit Transfer have arrested the leakage of government money to middlemen and fake ghost accounts. As of 2017, about 130,000 fake teachers (drawing government salaries), 3.5 crores fake LPG connections (using government subsidy) and 1.6 crore fake ration cards were discovered. Resultant savings amount to Rs. 65,000 crores. According to a World Bank report of 2016, Aadhaar linkage could potentially help save $11 billion annually in government expenditures through reduced leakage and efficiency gains. All these savings could be used for further infrastructure development.

Since 2014, all Macroeconomic indicators are strong, the fiscal deficit is reducing, FDI has been increasing, inflation is down, Forex Reserves are at an all-time high and crossed $400 billion for the first time ever.

Manufacturing under Make in India:

Since the launch of Make in India, Alstom (France) has set up its manufacturing factory for electric locomotives in India and General Electric (GE) of the USA for Diesel locomotives. Hanwha-Techwin (HTW) of South Korea is manufacturing Mobile K9 Self-Propelled VAJRA-T9 Artillery guns and Boeing (USA) is manufacturing Military Helicopters in collaboration with India’s Tata Aerospace Ltd. Boeing (USA) has tied up with India’s HAL and Mahindra Defence for manufacturing F/A-18 Fighter Jets in Bengaluru, Saab (Sweden) has offered to manufacture Gripen fighter jets in India (with Adani) and Lockheed Martin (USA) has offered to manufacture F16 fighter jets in India (with Tata). Lockheed Martin has also offered to manufacture third generation Javelin missiles in India. Russia is in the final stages of starting the production of AK-103 Kalashnikov Assault Rifles in collaboration with Ordinance Factory Board in India.

In Automobiles sector, Volvo (Sweden) has already started manufacturing XC90 cars in Bengaluru and Lexus (Japan) is about to set up their plant in India shortly.

In 2016-17, electronics worth $50 billion were manufactured in India compared to $43 billion in Imports. For the first time in history, Electronic goods made in India exceeded the imports from outside (Source: here). In addition, Electronics Manufacturing Corridor may come up shortly in U.P. to further increase local production (Source: here)

Image: Some successes from Make in India

Social welfare and improvement:

The government built 10 million (1 crore) houses for poor which is more than double the previous government, increased LPG gas connection coverage from 56% to 80% and digitally connected 1,10,000 village panchayats with optical fibres. Under Swachh Bharat Mission, the government constructed more than 78 million (7.8 crores) household toilets within 4 years. Consequently, 4 lakh villages and 19 states have been declared open defecation free. Within four years, rural sanitation coverage increased from 39% to 88%. More toilets were constructed in 4 years of current government than in 67 years by all previous governments put together. As explained in this article, India could completely eradicate Open Defecation by 2019. Real-time status of this initiative can be tracked on Swachh Bharat Mission Dashboard here.

Education Reforms:

Set up Atal Tinkering Laboratories (ATLs) in 2,500 schools across India. By exposing children in classes VI to XII to emerging technologies like the Internet of Things (IoT), sensors, robotics and 3D printing etc., the project aims to “cultivate one million children as innovators of tomorrow”. Modernizing Madrasa education (Muslim religious schools) by including NCERT books with mandatory Maths and Science subjects. This would enable children from economically weaker families to be equally equipped as mainstream schools for higher paying jobs. Financial incentives for Muslim girls encouraging them to complete graduation instead of dropping out of school.

All round cabinet performance:

Under the Home Ministry, the security situation improved drastically in LWE (Left Wing Extremism) affected areas and in the North-East. AFSPA removed completely from Tripura after 18 years, from Meghalaya after 27 years and in parts from Assam and Arunachal Pradesh. Jammu & Kashmir and Nagaland may see the partial withdrawal of AFSPA shortly if the situation improves. Naxal violence in LWE affected areas dropped to an all-time low. Under Power Ministry, the Solar power generation increased from 2.6 GW to 20 GW and under Road Transport Ministry, the National Highway construction speed is at an all-time high. Defence Ministry exhibited smart diplomacy in peacefully resolving Doklam issue with China. Foreign Ministry ensured that India got included in MTCR, Wassenaar Arrangement and Australia Group – which will strengthen India’s case for joining NSG (Nuclear Supplier’s Group) as next step.

The government has delivered well on most parameters and set up a solid base from which stronger and bolder economic reforms can be launched to propel the country towards even higher growth.

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