Has the indian economy changed wrt PM Mr. Modi or is it just a illusion of change?

1. - Old wine in new
bottle
By
Simran Sakshi
Roll- 147522
BBM Hons.

2. Indian Economy
Indian Economy – old wine in new bottle?
Or new wine in old bottle?
Conclusion
References
Contents

3.  The Indian economy is the 9th largest economy in the world by nominal GDP. It is one of
the G-20 major economies and a member of BRICS. It is one of the fastest growing
economies of the world.
 India ranks second world wide in farm output. Agriculture and allied sectors like forestry,
logging and fishing accounted for 18.6% of the GDP in 2005, employed 60% of the
workforce and despite a steady decline of its share in the GDP, is still the largest economic
sector and plays a significant role in the overall socio-economic development of India.
 India’s large service industry accounts for 57.2% of the country’s GDP while the industrial
and agricultural sectors contribute 28.6% and 14.6% respectively. Agriculture is the
predominant occupation in rural India, accounting for about 52% of employment. The
service sector makes up a further 34% and industrial sector around 14%.
 A closed economy, India’s trade and business sector has grown fast.
Indian Economy - Overview

4. India’s gross domestic product (GDP) grew 7.6 per cent in 2015-
16, powered by a rebound in farm output, and an improvement in
electricity generation and mining production in the fourth quarter
of the fiscal. Economic growth was estimated at 7.2 per cent in
2014-15.

5. Date 01 June 2016

7. According to data released
by the Central Statistics
Office (CSO), the farm sector
grew by 2.3 per cent from a
year ago compared with a 1.0
per cent contraction in the
December quarter. Mining
grew 8.6 per cent in the
March quarter, up from 7.1
per cent in the previous
quarter. Electricity, water and
gas production growth
surged to 9.3 per cent from
5.6 per cent in the December
quarter.
The growth in the “agriculture,
forestry and fishing” sector was
revised upwards to 1.2 per cent
in 2015-16 as against 1.1 per
cent in the advance estimates
for the same period.

8. The manufacturing sector’s growth was also revised downward to 9.3 per
cent.
Growth of trade, hotels, transport, communication services has been revised
downward to 9 per cent against 9.5 per cent estimated earlier, while financial,
insurance and real estate sector grew at 10.3 per cent.
The Economic Survey had projected a wide band of 7-7.75 per cent
growth in 2016-17, boosted by normal monsoon projection. It had,
however, cautioned that with the global slowdown likely to persist,
chances of India’s growth rate in 2016-17 increasing significantly beyond
2015-16 levels were not very high.

9. IS THE INDIAN
ECONOMY “OLD
WINE IN NEW
BOTTLE”?

11. Not much of a
change in situation
Absence of fresh
private investments,
huge stock of bad
loans & faltering
rural economy
Could not make land
acquisition easier as
promised
Exports remain
weak and bad loans
rose to a 14-year
high by the end of
September,
presenting a
potential drag on
growth as company
profits have lagged
the pace of
economic expansion
Over 90% of the
total bad loans (of
Rs 4,00,000 crore)
resulting in
cumulative losses of
over Rs 14,000
crore in the quarter
Not enough jobs
created
Unequal distribution
of wealth
Rising prices

12. How many jobs have been created in the last two years of the Modi government?
According to recent data of the Labor Bureau, India could create only 4.3 lakh jobs in the
first 20 months of the Modi government while the first nine months of 2015 saw only 1.34
lakh people getting jobs. The January-September period in 2015 also saw the worst
performance of the labor-intensive industries in the country in since 2009.
The government, hence, has to answer the question: Are the GDP numbers reflecting the
reality?
Questions are also being raised on India's success in executing an equitable distribution of
wealth. A Credit Suisse report has shown that only 10 per cent of Indians have an
overwhelming 76 per cent of the wealth.
The same was the case before Modi stormed to power in 2014. So what difference has the
country witnessed in terms of distribution of weath?

13. So far, the price of essential commodities like vegetables have not been controlled and if
the monsoon fails despite the high prediction, then rural India will take a hit, resulting in
further complication. The rising prices across the world along with that of fuel will pose
more threats to the Modi government to tackle. So again, what is the difference?
In his recent interview to NDTV, former disinvestment
minister Arun Shourie said Modi is mostly managing
headlines than addressing the actual problems in the
economy. With baby-step reforms well on track, Modi
should now focus on addressing the big-ticket items in
the list (GST, banking sector reforms) and let the
result of his work manage the headlines rather than
his talks.

14. "How quarterly GDP growth can be over 7
percent year on year, with manufacturing
apparently rising by 12 percent when high
frequency data show low single-digit
industrial production growth, a large
double-digit decline in exports, a very-low
capacity utilization rate, and ever-
declining earnings growth, we frankly
don't know," said Taimur Baig, Asia chief
economist at Deutsche Bank AG based in
Singapore.

17. Or “NEW WINE IN
OLD BOTTLE”?

18. India has eclipsed China as the world's fastest-
growing major economy with gross domestic
product projected to expand 7.6 percent in the
fiscal year through March.
Modi's opening of sectors such as railways and
defense helped draw record foreign direct
investment in 2015 during a period when
investors were fleeing from emerging markets.
Those inflows have helped lift foreign exchange
reserves by $47 billion since the end of March
2014 to $350 billion at the end of December.

20. Approval of changes in
certain industrial & labor
laws in Rajasthan
• Proposal to increase the
requirement for government
permission to shut down a
unit that employs fewer than
100 workers to 300 workers
• Boost domestic &
international investment in
the manufacturing sector
Allowance of 100%
foreign direct
investment in the
railways sector and
the increase of
foreign direct
investment limits
from 26% to 49% in
the defense sector
Insurance laws
amendment bill may
be introduced
• It will hike the FDI
limit in Indian
insurance companies
from 26% to 49%

21. • It has attracted $400 billion-plus worth of
overseas investment commitments
• The government hopes to create 100 million
new factory jobs by 2022 and increase
manufacturing's share of the economy to 25
percent by 2022 from about 18 percent
“Make in India”
campaign to
promote local
manufacturing

22. • Based on the Unique identity number or Aadhaar
card
• The LPG subsidy roll out through DBT was
indeed a great move by this government to curtail
leakage and diversion of government funds
• In the next three years, the government should
enhance the reform task to food, fertilizer and
other government benefits to the poor. The
passage of Aadhaar Bill is a great enabler.
Subsidy
reforms
process
through DBT

23. Prime Minister Narendra Modi is right on track
of reforms front — not through big bang
reforms, but several small, baby-steps.
However, Prime Minister Modi’s
government has already set the
stage for a big reforms push. The
government has now started
moving towards the big reforms-
beginning with the passage of the
GST in the Rajya Sabha.
The GST is described as a
comprehensive tax on manufacture, sale
and consumption of goods.
This tax is expected to dramatically
reduce (if not remove) the multi-layered
taxation structures currently prevailing in
India by introducing uniform tax rates
across India and reducing exemptions.
GST can significantly push up the GDP
by 1.5%-2% going ahead
When it comes to banking sector
reforms, the passage of the
bankruptcy law is a major step in the
process of overhauling the country’s
Rs 101 lakh crore banking sector.
It will make it easier for Financial
Institutions and banks to deal with bad
debts arising out of failed corporate
ventures.
The bill sets deadline of 6 months
within which corporates have to settle
their dues.

26. Modi government score card

27. The Modi government did not, does not, have
a legislative majority and is required to
engage the Opposition to get laws through. As
chief minister, he got things done by personal
supervision of government schemes.
The same model has been transplanted at the
Centre. And it has limitations, particularly
when it comes to systemic reform. He is
good at is taking up ongoing schemes and
getting them done better.Swachh Bharat, Skill India, Make in India,
Jan Dhan, Digital India, Direct Benefit
Transfer via Aadhaar-linked bank accounts,
Smart Cities and rural electrification BSE
0.18 % schemes all repackaged ongoing
schemes to give them greater visibility and
political commitment.
Overall, the picture we have over
the first two years of the Modi
government is steady,
incremental reform and a
gradual progress to India's
potential for double-digit growth.
However, some challenges
remain to be fulfilled for the
remaining term.

28. It does not matter whether the wine is old or new. It does not
matter whether the reforms are new or just a newer version of
old.
What matters is whether the wine or the reforms is real or
fake. If it is real then it will hike our economy and benefit the
nation but if it is mixed with malicious components such as
corruption, it may lead to death or downfall of the Indian
economy.
Conclusion

29.  http://statisticstimes.com/economy/gdp-growth-of-india.php
 http://indianexpress.com/article/business/economy/gdp-7-9-percent-its-official-india-is-now-the-fastest-growing-economy-
in-the-world/
 http://indianexpress.com/article/india/india-news-india/no-substantial-sustained-economic-reforms-in-two-years-of-modi-
government-us-crs-report-2860131/
 http://www.firstpost.com/business/prime-minister-narendra-modi-gst-banking-jan-dhan-reforms-aadhaar-bill-2800014.html
 http://economictimes.indiatimes.com/wealth/invest/2-years-of-narendra-modi-government-10-steps-that-transformed-lives-
of-small-investors/articleshow/52477538.cms
 http://economictimes.indiatimes.com/news/politics-and-nation/modi-sarkar2-pm-narendra-modis-government-on-intrinsic-
and-incremental-economic-reform/articleshow/52271507.cms
 http://timesofindia.indiatimes.com/business/india-business/Modi-govt-reforms-have-led-to-macro-stability-
Rajan/articleshow/52458070.cms
 http://www.oneindia.com/feature/celebration-time-is-over-what-modi-govt-is-thinking-about-economy-2127455.html
 http://www.ndtv.com/india-news/modi-reforms-face-headwinds-despite-soaring-indian-economy-1291663
 http://indianexpress.com/article/explained/gst-bill-parliament-what-is-goods-services-tax-economy-explained-2950335/
 https://www.youtube.com/watch?time_continue=42&v=JL5oEXngen4
 http://www.hindustantimes.com/india/niti-aayog-old-wine-in-new-bottle/story-EpPFWtjVVKhfAvUc9ZuoEI.html
 http://economictimes.indiatimes.com/news/economy/policy/niti-aayog-old-planning-commission-wine-in-a-new-
bottle/articleshow/49875039.cms
 http://indiareforms.csis.org/160715_india_reforms.pdf
References