ModiNomics – Ananlysis Of Modi’s Economic Policy

The Dawn of 26th May 2014 was different. Indian politics was going to change forever. Mr. Narendra Modi, BJP’s Prime Ministerial candidate was going to sworn in as Prime Minister of India. He took charge as PM and everyone hoped for growth in economy. The first thing he did was to appoint Nripendra Mishra as his Principal Secretary and KC Ajit Doval as his NSA. Before writing this article I stumbled upon a YouTube video where Ajit Doval is giving speech to audience on Defense Industry of India then and now. He did say that India’s Defense Industry in 50’s and 60’s was in better position than now. Even American’s were sending their fighter planes to India for repairs and Maintenance. Nehru was not willing to improve defense industry, but was interested in agricultural reforms. All his successors were also ignorant about Defense Industry.

Since 2014 Modi has changed governments approach towards Defense Industry. All untouched sectors of Indian economy are being taken care of. First 2 years were of slow but steady process. He wanted to eliminate Indians easy earn and enjoy mindset. He did initiate MoU’s with foreign defense companies. Make in India was the initiative to improve Industry profile of India. Keeping Eye on China Modi did set objective of improving manufacturing. India has edge on china because of quality of goods manufactured in India. To improve liquidity in market Modi took initiatives like Bandhan Bank, Mudra Yojana etc. Reducing NPA was a challenge. He is still strugling in this field. But all of sudden Bankrupsy Code introduced. Banking reforms are going on.

In September 2016, Modi announced demonetization of ₹ 500 and ₹ 1000 notes. It was a huge setback on Black money holders, terrorists. All economy was struggling in initial months of “NoteBandi”. But very few marked it out that main aim of NoteBandi was not black money or Terrorist organisations. Main aim was to stop upcoming recession in market. Yes, the same way as it happened in 2008 in USA. Real estate market was to burst. Modi Successfully eliminated some symptoms of upcoming recession. If notebandi was not imposed there was a heavy risk of fall of banking system. Dr. Manmohan Singh did oppose this step because of his political party but he knew Modi has shown courage to do this NoteBandi.

Everybody is wondering if Modi is going to do an another “surgical strike” on Benami Properties. But no one knows when will it happen except Modi and his close aids. In 2018, Modi will not take any tough decision. So our best chance for another surgical strike on economy is narrow. I personally think that low intensity surgical strike on black economy or Benami property holders could take place somewhere in-between Sept. 2017 to Nov. 2017.

Modi is trying to bring out money which is stored in strong rooms by Economic terrorists. This is because he want to improve liquidity so that government revenue will improve. GST is another reform which was long pending from 2000. Atal Bihari Vajpeyee tried a lot for GST but couldn’t succeed. Impact of GST can only be visible in long term. Everyone is over thinking about it. Its just a change in taxation system. Main problem is people are not maintaining proper books of accounts. So revenue collection was very low. Salaried employees are suffering due to higher tax rate. Buying power of average Indian Citizen is very low. Systematic risk is very high.

On other Part all Pro-Modi people are claiming everything is going to settle in 1 year or so. But reality is different. Indian Economy has lost its capital multiplier effect due to low liquidity. In short Indian Economy is picking up pace but not enough to make people happy. It will take more than 3 years to see good results.

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