At a public gathering in Gujarat on Saturday, Prime Minister Narendra Modi presented a lengthy list of his government’s achievements in the field of social welfare. Modi, who ended his eight-year term on May 26, did indeed speak. There is no doubt that an expansion and deepening of the welfare state has enabled it to retain an unsurpassed level of popularity. However, the economic track record could have been significantly better.
In the early days of his tenure as prime minister, cheap global crude oil prices helped him manage India’s budget deficits and hence high public debt, making it an outlier among emerging markets. In 2015-16, India also snatched the statistical glory from China of being “the fastest-growing major economy,” and clung to that status for the following year, before losing it to its neighbors in 2017-18. It is another matter that China’s economy is almost five times the size of India’s.
India’s economic growth had taken a hit even before the pandemic wreaked havoc around the world. The pandemic and external shocks have pushed government debt even higher in recent years. Despite the slack in the economy, inflation has tended to rise at an alarming rate in recent months due to unfavorable external factors. In 2014, double-digit growth was still expected, and in 2022 growth is expected to be around 7%.
As Modi enters the fourth year of his second term as prime minister, a deep slowdown – if not recession – in the West, China’s struggling and India’s relative isolation from global shocks may mean India solidify its recently regained status of a faster-growing economy can . However, the government will have to answer tough questions about “growth without unemployment” and struggle to find resources to sustain growth itself.
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