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How India is transformed into a New India in just 3 yrs

How India is transformed into a New India in just 3 yrs

May-2017, Despite of India being the fastest growing major economy in the world, the opposition parties In India have totally discredited Modii Government of doing anything substantial. Although, they have not presented any credible data to substantiate their claims. The complete absence of any logical narrative by the opposition is nothing but silent approval of present Government's policies.

The whole narrative of repackaging of previous government schemes raises more questions on previous governments as despite of knowing the problems and their obvious solutions why it didn't pushed the reforms like the present government is doing.

Even if the people of this country forgive the huge scams which occurred during UPA times, the quantum of monetary and opportunity losses which occurred due to mere inaction and incompetence of UPA government will haunt opposition parties forever.

Background

Similar to how Dadabhai Naoroji proved how British colonialism was draining India of its wealth and dignity, let’s start our analysis with what was inherited by Modi government and what it made out of It.

Sensex

Although Sensex is not a good Indicator of health of an economy, but it still indicates the investor confidence in the strength of an economy and policies pursued by its government. Although the Lutyens media recognize the rise in Sensex points but they never tell the complete picture by smartly changing the base.

They start their comparison from 24th May 2014 when the Sensex was around 25,000 points but one can easily find out by looking at the old Newspapers that the 'Modi Effect' on Sensex started when he was declared as PM candidate. At that time Sensex was hovering around 19000. It reached all-time high in December itself. Modi effect was breaking records even before elections.

Now comparing this from the present level of above 31,000 points shows investor confidence. Despite of all the diversions created by opposition parties from JNU to Intolerance drama, the investor confidence has not subsided. This rise is around 65% from September 2013 i.e., three and a half years, which is nothing less than phenomenal.

Any analysis of a major economy cannot be completed without comparing it with other major economies. Let's compare with China, South Africa and Brazil. Russia is currently under sanctions so it won't be fair to include them. The data clearly shows huge improvement in macroeconomic stability and investor confidence. See the Table below (Approximate Data).

YEAR

INDIA

CHINA

BRAZIL

SOUTH AFRICA

SEP 2013

19,000

24,000

53,000

43,000

May 2017

31,000

31,000

64,000

54,000

Percentage Change

65%%

29%

20%

25%

GDP Growth

GDP growth rate inherited by NDA government was 6.9% of GDP for the year 2013-14 and 5.1 for the previous year. It clearly shows the effect of announcement of Narendra Modi as PM candidate on economy even before he was elected. Everybody wanted a piece of the fastest growing economy India was destined to become under PM Modi.


The GDP growth during first quarter of 2013-14 was well below 5 and average for the year reached 6.9 only because of huge shift in investor attitude. Although India's GDP is seasonal, such change of gears was neither observed before coronation of Mr. Modi nor after. In fact India's GDP never touched that low level in any quarter after despite Demonization.

Any analysis of Indian GDP would be incomplete without comparing it with other countries. China and India are two major economies growing at brisk pace fort past two decades. It would be fair to compare growth rates of these two. Take a look at Table below.

Financial Year

India

China

Difference

2007-08

9.80

14.20

4.4

2008-09

3.89

9.64

5.75

2009-10

8.48

9.21

0.73

2010-11

10.26

10.41

0.15

2011-12

6.64

9.30

2.66

2012-13

5.08(RE)

7.76

2.68

2013-14

6.90(RE)

7.75

0.85

2014-15

7.17

7.36

0.19

2015-16

7.46

6.76

0.70

2016-17*estimated

7.20

6.30

0.90

It is clear from the table above that it was not a miracle that India reached almost 10% growth rate for a short period of time during 10 years of UPA rule. China outdid India Every time except last two years. The average for 10 years of UPA rule comes out to be near 7%. This is not at all compared to nearly 8% growth rate it inherited in previous fiscal i.e., 2003-04.

Inflation

 Inflation is a necessary evil for sustainable growth but above a certain level it starts receding the economic gains achieved. During most of the quarters under UPA government, the inflation was extremely high. Let's debunk the theory that mere fall in oil prices have caused this dip in Inflation. Look at the table below.

Year

Price of Crude in dollars(ppac.org.in)

Price of crude in Rupees(At corresponding exchange rate)

Inflation(Consumer Price Index)

2008-09

83.97

3738

9.70%

2009-10

69.76

2929

14.97

2010-11

85.09

4080

9.47

2011-12

111.89

5217

6.49

2012-13

107.97

5778

11.17

2013-14

105.52

6300

9.13

2014-15

84.16

5292

5.86

2015-16

46.17

2990

6.32

2016-17

46.56

3167

2.23

The myth of Inflation linked only to oil prices is busted here. When none converts the price into rupees the picture becomes clearer. Although, the benefit of doubt to the UPA mismanagement can be attributed for years 2012-14 but what about other years? Except 2012-14 the oil prices in rupees were always below 2014-15 price of 5292 but inflation was never below 5.86% observed that year under Modi government.

In fact the inflation under UPA was never below 6.32 , the highest observed under Modi Government. The media houses which cry for UPA and say that crude prices were high but they intentionally neglect the exchange rate. Also, the food inflation was high throughout UPA regime, but despite of two consecutive El-Nino years it is lower under Modi regime. The whole inflation theatrics is around Toor Daal as if it is the only things Indians eat whose price reached to 200per kg for few months in three years. But now it seems that the lutyens media has lost the flavor for toor because it has become too cheap for them.

Posted On : 01-Jun-2017

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