Since the launch of Demonetisation in November 2016, opposition parties have routinely blamed Prime Minister Narendra Modi of "destroying" the Indian economy with decisions like demonetisation and GST rollout last year.
Since the launch of Demonetisation in November 2016, opposition parties have routinely blamed Prime Minister Narendra Modi of “destroying” the Indian economy with decisions like demonetisation and GST rollout last year. The most scathing comments against Modi came from ex-PM Manmohan Singh and Congress president Rahul Gandhi. Speaking in Parliament after the launch of demonetisation, Singh had predicted that economy would fall by 2 percentage point and such decision was like “organised loot and legalised plunder”.
An economist himself, Singh’s comments were widely reported. His prediction indeed came true briefly last year when the GDP for April-June quarter of Financial Year 2017-18 fell to 5.7 per cent. In the corresponding quarter of FY 2016-17, the GDP growth was registered at 7.2 per cent.
Since the brief fall in April-June quarter, the GDP data has been on an upswing, almost the same as PM Modi has been claiming since the noteban decision – that the economy would again grow fast after “short-term pain” of decisions like demonetisation and GST. The latest World Bank projection vindicates Modi.
World Bank’s “January 2018 Global Economic Prospects” report says India would be the fastest growing economy in the world in 2017-18. “India is expected to pick up to a 7.3 percent rate in fiscal year 2018/19, which begins April 1, from 6.7 percent in FY 2017/18,” the report says.
The report notes about South Asia: “Growth in the region is forecast to accelerate to 6.9 percent in 2018 from an estimated 6.5 percent in 2017. Consumption is expected to stay strong, exports are anticipated to recover, and investment is on track to revive as a result of policy reforms and infrastructure upgrades. Setbacks to reform efforts, natural disasters, or an upswing in global financial volatility could slow growth.”
China is expected to grow by 6.4 percent in 2018. “Growth in China is forecast to moderate to 6.4 percent in 2018 from 6.8 percent in 2017,” World Bank says.
“A structural slowdown in China is seen offsetting a modest cyclical pickup in the rest of the region. Risks to the outlook have become more balanced. Stronger-than-expected growth among advanced economies could lead to faster-than-anticipated growth in the region. On the downside, rising geopolitical tension, increased global protectionism, an unexpectedly abrupt tightening of global financial conditions, and steeper-than-expected slowdown in major economies, including China, pose downside risks to the regional outlook.” the report adds.
As the state of the economy looks bright for PM Modi in the run-up to 2019 General elections, it is probably the best time for the opposition to stop thrashing him with the economy stick and find something else.