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The Indian economy - an assessment of 5 key policies

Following the weakening Indian economy and the IMF's officially downgraded growth forecasts for India, there follows a brief review of five key policies of the current government and their performance

indian economy

When Narendra Modi became India's prime minister in the spring of 2014, the Indian economy was in the doldrums. There was a marked political paralysis in the Indian central government, largely due to the corruption cases involving the bureaucracy of the central government and the then politicians. Modi promised the Indians that "acche din" (good days) would come. And the expectation was that the Indian economy would prosper well under a pro-business political regime, led by a politician known for his strong and determined actions.

Modi had mixed success in fulfilling his promises. Here's a breakdown of some of Modi's key guidelines and performance. 

And the expectation was that the Indian economy would prosper well under a pro-business political regime, led by a politician known for his strong and determined actions. And the expectation was that the Indian economy would prosper well under a pro-business political regime, led by a politician known for his strong and determined actions.

1. Demonetisation

India's economic growth has not recovered to the high level recorded in the first decade of the 2000s. One important reason for the slow recovery was the demonstration policy of the Modi government. On November 8, 2016, the government withdrew all 500 and 1000 rupees from circulation and announced the issue of new 500 and 2,000 rupees in exchange for the old ones that are no longer valid today. India's economic growth has not recovered to the high level recorded in the first decade of the 2000s.

2. Goods and services tax (GST)

Modi's second bold political step was the introduction of the Goods and Services Tax (GST) in July 2017. The goal of the GST policy was to create a common market in India, in contrast to the many different sales taxes that existed in various Indian states. The introduction of the GST initially had a negative impact on the economy. This was particularly the case in India's large informal sector, where the vast majority of people outside agriculture are employed.

The initial implementation of the GST was not well managed - especially small businesses were confused by the high reporting requirements, which put a huge burden on compliance. At the same time, the GST policy could be considered as one of the most important political initiatives since the country's most important economic reforms of 1991 and as one of the most significant changes to the constitution since 1950. While the initial impact of the GST policy on the Indian economy was a negative shock, the long-term impact is likely to be strong. At the same time, GST policy could be considered one of the most important political initiatives since the country's most important economic reforms of 1991 and as one of the most significant changes to the constitution since 1950.

3. Delivery of public goods

Modi provided a large number of important public goods programs based on previous government initiatives. For example, in rural India, toilet coverage increased from 47% of households in 2015 to 74% in 2017, largely due to the Modi government sanitation program. For example, in rural India, toilet coverage increased from 47% of households in 2015 to 74% in 2017, largely due to the Modi government sanitation program. For example, in rural India, toilet coverage increased from 47% of households in 2015 to 74% in 2017, largely due to the Modi government sanitation program.

4. Agriculture

agriculture in india

About 50-60% of the Indian population is dependent on agriculture in some form. This sector has seen a prolonged decline in rural incomes since 2011, leading to a so-called agrarian crisis. 

Although the roots of this crisis are deeply rooted, this could also be due to the moderation government's moderation in raising the minimum support prices for staple foods such as rice, wheat, and legumes - as he promised in his 2014 campaign.

This would have prevented the return of food price inflation, which was a major cause of dissatisfaction with the previous government. Although the roots of this crisis are deeply rooted, this could also be due to the moderation government's moderation in raising the minimum support prices for staple foods such as rice, wheat, and legumes - as he promised in his 2014 campaign.

5. Jobs

jobs in india

Although the roots of this crisis are deeply rooted, this could also be due to the moderation government's moderation in raising the minimum support prices for staple foods such as rice, wheat, and legumes - as he promised in his 2014 campaign.Perhaps the most disappointing feature of the Modi government has been the lack of success in creating jobs for the majority of the unskilled and poor Indian workforce. Unemployment rose to a 45-year high following a leaked report by the Indian National Sample Survey Organization. 

The Modi government's modest job creation job was particularly surprising as it initially intended to rejuvenate the manufacturing sector as a source of employment creation with the much-noticed Make in India program. Here, as in agriculture, the roots of the Indian manufacturing industry are deeply rooted. They may be related to India's inability to promote labor-intensive industrialization in China and other East Asian countries. 

The reasons why this was the case are complex and may be related to the low skill level of Indian workers, poor infrastructure and outdated Indian labor laws. Despite all their reformist capabilities, the Modi government has made little progress in providing jobs that India's ambitious youth are so desperately looking for. This could prove crucial in the national elections of 2019.

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