From Prime Minister Narendra Modi to Finance Minister Nirmala Sitharaman, India’s goal to be a $5 trillion economy has been the main talk point in the last eight years of the NDA government. From the time of coming into power, the prime minister has stressed on his government’s goal of “sabka sath, sabka vikas” ie, growth for all. Economic growth has been mixed in the last eight years – it was hurt further because of the unprecedented pandemic, and then a war in Europe.
Economists and experts have indicated that even before the pandemic, demonetisation, implementation of GST and bad loan problem started impacting India’s economic growth. Now with the Russia Ukraine war creating ripples on Indian shores as well as throughout the world, major challenges to sustain growth and create a trillion dollar economy remain.
Meanwhile, here is a look at how the current government has performed, in terms of GDP growth, consumer inflation and joblessness rate from 2014 till now.
India’s real Gross Domestic Product (GDP) growth, a report card of how India’s overall economy has performed in the last eight years, has been a mixed bag. The Indian economy on an average was headed towards an upward trajectory from 2014 to 2016. However, GDP growth slipped in the next two years. Data indicated that growth rate slowed due to slow growth in India’s agriculture and manufacturing. There was a further slip in GDP rate to 3.7 per cent in 2019 due to the crisis in the NBFC sector, introduction of GST and demonetisation.
In 2020, with COVID-19 pandemic hitting every economy, India saw its GDP growth in negative territory for the first time in four decades. With the country coming back to shape after the last two years of turbulence, India’s economy seems to be rebounding. Estimated GDP growth in 2021 stood at 8.9 per cent and going ahead it is expected to be 8.2 per cent in 2022, according to the International Monetary Fund (IMF). Like other economies, the omicron wave and now the Russia and Ukraine war has dented economic growth, however, India is expected to be better off than other emerging economies, according to estimates from IMF and World Bank.
For consumer inflation, the Reserve Bank of India has a lower tolerance limit of 2 per cent and an upper tolerance limit of 6% for inflation. CPI inflation averaged at 5.8 per cent in 2014, the year when the Narendra Modi government assumed power. It remained within RBI’s upper tolerance limit from 2014 to 2019, benefiting from low crude oil prices. However, it breached the 6 per cent mark in 2020 after the unprecedented global pandemic. Average consumer inflation was at 6.2 percent in 2020. It was mainly driven by rice in food prices along with the high fuel and commodity prices following the lockdowns imposed after the pandemic struck.
In 2021, it softened to 5.5 per cent. But this year, it is expected to breach RBI’s upper threshold once again and peak to 6.1 per cent mainly because of US Federal Reserve’s expected rate hikes and the ongoing war in the black sea region which has pushed up prices of energy, food, and raw materials all over the world. Going ahead, inflation is expected to be a big worry for the government as well as the RBI as the war in Ukraine shows no signs of abatement as yet.
The unemployment rate remained at 5.4 per cent on an average from the time the Modi government assumed power till 2017. Joblessness fell marginally to 5.3 per cent in 2018 and 2019. However with pandemic ravaging the livelihood, unemployment spiked to 8 per cent in 2020, ie the first year of pandemic. According to Pew research, the middle class shrank by 35 million while the number of people who were pushed to poverty was 75 million because of COVID-19 pandemic led recession.
It remained high in 2021 at 6 per cent, according to data from the World Bank. According to recent data from the Centre for Monitoring Indian Economy (CMIE), India’s labour force participation rate fell to 40 per cent from 47 per cent in 2016, showing signs of economic distress. CMIE said millions of Indians in the working-age group (15 years and older) left the labour markets, they stopped even looking for employment, possibly too disappointed with their failure to get a job and under the belief that there were no jobs available. It has however improved in April. Creating jobs that are broad-based, ie jobs for youth, women and across sectors, is going to be a challenge ahead for the current government.