The Futility of Modi’s Reforms: A Red Flag for Indian Economy?

The back-to-back economic reforms proposed and implemented by PM Modi have recently been subjected to serious criticism by many of the finance stalwarts in the country. BJP Leader and former Union Finance Minister, Yashwant Sinha’s stance on the futility of Modi’s reforms, has especially sparked valuable conversations. In one of his recent statements, Sinha opines- “Demonetisation has proved to be an unmitigated economic disaster, a badly conceived and poorly implemented GST has played havoc with businesses and sunk many of them and countless millions have lost their jobs with hardly any new opportunities coming the way of the new entrants to the labour market.”A retrospection of the twin reforms that materialized in the 2016-2017 period bares some of the critical faux paus that were overlooked at the onset. Demonetization that came into effect on November 8, 2016, was intended to put an end to the illicit economic activities in India. The Goods and Services Tax (GST) implemented from July 1, 2017 was aimed at eliminating the cascading taxes imposed by the state and the central government, and creating a single, unified market. In reality, however, both the reforms resulted in a nationwide economic catastrophe. Speaking of demonetization, former Union Minister, Arun Shourie directly labelled it as- “the greatest blunder in 70 years”. Most hard-hit, as per reports, have been the sectors like- private investment, agriculture, construction industry and the import-export businesses. Private investments have drastically plummeted and GDP has steadily declined in every quarter, hitting a staggering 5.7% in the June quarter. The credit growth to the prominent industries have suffered multi-year lows owing to the high bank non-performing assets (NPA). The current state of affairs may worsen and precipitate unemployment in the upcoming years. What was supposed to be an economic revolution, turned out to be a chain of debacles. This economic downturn is mostly attributed to loosely formed and implemented policies. The top-down centralized approach adopted, has mostly been myopic and lacked adequate planning. Modi government, however, is still in a state of denial about the aftermath of these economic moves. Economists and the finance experts fear that the crises may aggravate if necessary actions are not taken at the earliest. Upliftment of the current state of things is an economic imperative at present.  
Kranthi Tilak Reddy
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The Futility of Modi’s Reforms: A Red Flag for Indian Economy?

Kranthi Tilak Reddy
News Article
03rd Oct, 2017
The Futility of Modi’s Reforms: A Red Flag for Indian Economy?

The back-to-back economic reforms proposed and implemented by PM Modi have recently been subjected to serious criticism by many of the finance stalwarts in the country. BJP Leader and former Union Finance Minister, Yashwant Sinha’s stance on the futility of Modi’s reforms, has especially sparked valuable conversations.

In one of his recent statements, Sinha opines- “Demonetisation has proved to be an unmitigated economic disaster, a badly conceived and poorly implemented GST has played havoc with businesses and sunk many of them and countless millions have lost their jobs with hardly any new opportunities coming the way of the new entrants to the labour market.”

A retrospection of the twin reforms that materialized in the 2016-2017 period bares some of the critical faux paus that were overlooked at the onset. Demonetization that came into effect on November 8, 2016, was intended to put an end to the illicit economic activities in India. The Goods and Services Tax (GST) implemented from July 1, 2017 was aimed at eliminating the cascading taxes imposed by the state and the central government, and creating a single, unified market. In reality, however, both the reforms resulted in a nationwide economic catastrophe.

Speaking of demonetization, former Union Minister, Arun Shourie directly labelled it as- “the greatest blunder in 70 years”.

Most hard-hit, as per reports, have been the sectors like- private investment, agriculture, construction industry and the import-export businesses. Private investments have drastically plummeted and GDP has steadily declined in every quarter, hitting a staggering 5.7% in the June quarter. The credit growth to the prominent industries have suffered multi-year lows owing to the high bank non-performing assets (NPA). The current state of affairs may worsen and precipitate unemployment in the upcoming years.

What was supposed to be an economic revolution, turned out to be a chain of debacles. This economic downturn is mostly attributed to loosely formed and implemented policies. The top-down centralized approach adopted, has mostly been myopic and lacked adequate planning.

Modi government, however, is still in a state of denial about the aftermath of these economic moves. Economists and the finance experts fear that the crises may aggravate if necessary actions are not taken at the earliest. Upliftment of the current state of things is an economic imperative at present.  

Kranthi
Blog Author

Kranthi Tilak Reddy is one of the co founders and COO of White Matter Advisory services P Ltd. He is an Engineering graduate from SRM University and has done his Masters in finance.Being a true go-getter and an optimist to the core he has grown up the ranks in banking industry at an astonishing rate, his last stint being Associate Director, Business Clients -South with Standard Chartered Bank. With over 10 years of association with SME businesses and clients he certainly brings rich vein of expertise to the WMA table but more importantly his alluring passion towards great and customer service” the foundation on which he asserts WMA has been built.

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