India’s economy was once tagged as a global bright spot, but it is still down in the dumps since the GDP growth has fallen over six quarters.
Prime Minister Narendra Modi promised to take India’s economy to a new height when he came to power in 2014, but many reforms he has made have yet to materialize and some of the changes made are even hurting the growth.
India is still battling the two blows Modi landed on the economy – the sudden ban of 86% of India’s cash and overhaul of the tax system targeted at turning India’s 29 states into a single market.
Guruswamy said, “The ban on the cash was a big blow, just when the economy seemed at the point of inflection in 2016 and the decline had begun leveling off” as stated in the CNN.
When Modi implemented a national goods and services tax in July last year, so many people hailed the implementation as a positive step that can simplify business. But ever since the implementation, there has been a significant disruption in the country’s economy.
The government said it expected a slowdown in the growth, but it seems the sharp drop has blindsided the government.
Most of the top financial institutions have made their worries concerning the economy known and most of them believe the economy will struggle to regain its momentum. The Central Bank itself slashed its growth forecast last year from 7.3% to 6.7%. Just in September last year, the State Bank of India owned by the government was even a bit blunt as it said the slowdown is “not short-term or even transient.”
Modi is not delivering as promised
Business leaders, analyst and even the members of Modi’s party, are questioning his economic policies, not only because of the downturn his changes have caused but also his reforms that are not happening,
Aside from the priority that analysts believe Modi should place on pushing through measures to ease land acquisition laws and liberalize the labor market, which Modi looks not convinced about, there have also been calls to overhaul the banking system. The reason is that about 12% of India’s total loans have really gone bad according to India’s official data.
Hundreds of thousands of new jobs needed
Modi now faces an uphill struggle to control the ship and make it steady. Experts say the most pressing challenge is to create jobs he promised before getting to the office. About twelve million Indians join the workforce every year, but there are currently only few Government Jobs in Himachal Pradesh and other parts of the country.