ModiNomics – Analysis Of Modi’s Economic Policy

modinomics
NEW DELHI/INDIA, 16NOV08 -Narendra Modi, Chief Minister of Gujarat, India, speaks during the welcome lunch at the World Economic Forum's India Economic Summit 2008 in New Delhi, 16-18 November 2008. Copyright World Economic Forum (www.weforum.org)/Photo by Norbert Schiller

The Dawn of 26th May 2014 was different. Indian politics was going to change forever. Mr. Narendra Modi, BJP’s Prime Ministerial candidate was going to sworn in as Prime Minister of India. He took charge as PM and everyone hoped for growth in the economy. The first thing he did was to appoint Nripendra Mishra as his Principal Secretary and KC Ajit Doval as his NSA. Before writing this article I stumbled upon a YouTube video where Ajit Doval is giving a speech to the audience on the Defense Industry of India then and now. He did say that India’s Defense Industry in the 50’s and ’60s was in a better position than now. Even Americans were sending their fighter planes to India for repairs and Maintenance. Nehru was not willing to improve the defense industry but was interested in agricultural reforms. All his successors were also ignorant about the Defense Industry. modinomics

Since 2014 Modi has changed governments’ approach towards Defense Industry. All untouched sectors of the Indian economy are being taken care of. The first 2 years were of a slow but steady process. He wanted to eliminate Indians’ easy to earn and enjoy mindset. He did initiate MoU’s with foreign defense companies. Make in India was the initiative to improve the Industry profile of India. Keeping Eye on China Modi did set the objective of improving manufacturing. India has an edge in china because of the quality of goods manufactured in India. To improve liquidity in market Modi took initiatives like Bandhan Bank, Mudra Yojana, etc. Reducing NPA was a challenge. He is still struggling in this field. But all of sudden Bankruptcy Code introduced. Banking reforms are going on. modinomics

In September 2016, Modi announced demonetization of ₹ 500 and ₹ 1000 notes. It was a huge setback on Black money holders, terrorists. All economy was struggling in initial months of “NoteBandi”. But very few marked it out that the main aim of NoteBandi was not black money or Terrorist organizations. The main aim was to stop the upcoming recession in the market. Yes, the same way as it happened in 2008 in the USA. The real estate market was to burst. Modi Successfully eliminated some symptoms of an upcoming recession. If notebandi was not imposed there was a heavy risk of fall of the banking system. Dr. Manmohan Singh did oppose this step because of his political party but he knew Modi has shown courage to do this NoteBandi. modinomics

Everybody is wondering if Modi is going to do another “surgical strike” on Benami Properties. But no one knows when will it happen except Modi and his close aides. In 2018, Modi will not take any tough decisions. So our best chance for another surgical strike on the economy is narrow. I personally think that low-intensity surgical strike on the black economy or Benami property holders could take place somewhere in-between Sept. 2017 to Nov. 2017. modinomics

Modi is trying to bring out money which is stored in strong rooms by Economic terrorists. This is because he wants to improve liquidity so that government revenue will improve. GST is another reform that was long pending from 2000. Atal Bihari Vajpeyee tried a lot for GST but couldn’t succeed. The impact of GST can only be visible in the long term. Everyone is over thinking about it. It’s just a change in the taxation system. The main problem is people are not maintaining proper books of accounts. So the revenue collection was very low. Salaried employees are suffering due to the higher tax rate. The buying power of the average Indian Citizen is very low. Systematic risk is very high.

On the other Parts, all Pro-Modi people are claiming everything is going to settle in 1 year or so. But the reality is different. Indian Economy has lost its capital multiplier effect due to low liquidity. In short Indian Economy is picking up pace but not enough to make people happy. It will take more than 3 years to see good results.

Also read,

Impact of GST on Restaurants

GST from the Mirror of Chanakya Arthshastra

मोदी सरकार की मुद्रा योजना का कैसे उठाएं लाभ?

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