The three years of the Modi government can claim some significant economic successes. Macro-stability tops the list. The twin deficits on fiscal and external current account pose no threat. Annual inflation rates have been contained to under 5%. The new monitory framework to tackle consumer price inflation down to 6% and getting the RBI to do the job is a bold measure. Investors are now reasonably confident about political stability. The Nifty and Sensex are currently trading at an all time high. The reform record may not however be all that bright. Of course, the progress made by the Goods and Services Tax (GST) is quite satisfactory. All states are on the whole agreed to accept a nationwide and uniform system of taxing commodities and on value additions at each stage. The Insolvency and Bankruptcy Code has been introduced and it helps winding up or restructuring of failed firms. The Foreign Investment Promotion Board has been abolished. It is expected to bolster the country’s policy of ensuring ease of business.
Demonetization has of course raised a storm of controversy. It has caused great suffering to the common people. But on the other hand its collateral benefits cannot be denied. The taxpayer base has been widened, digitization has received an impetus and direct transfer of subsidies to bank accounts of beneficiaries has been welcome steps. On the dark side, investments have not been revived and employment has shrunk to a dismal extent. Not many new factories have come up. IT and real estate sectors are retrenching staff. NPAs of banks have gone up significantly. Unless there is considerable employment generation, the economy can only be shaky.
