Final Draft:

“Policies of Modi
Government and its
Effect on Economy”

Submitted by: Aditi Banerjee

Roll No.: 2225
Semester: 4th Sem, BBA LLB (H)
Submitted to: Dr. Kirti
(Asst. Professor of Management)
Subject: Business Environment
This synopsis is submitted for the partial
fulfilment of course in Business
Environment for the completion of BBA
LLB (H) course.

CHANAKYA NATIONAL LAW

UNIVERSITY, PATNA
 ACKNOWLEDGEMENT

Writing a project is one of the most difficult academic challenges I have ever faced. Though
this project has been presented by me but there are many people who remained in veil, who
gave their support and helped me to complete this project.

First of all, I am very grateful to my subject teacher Dr. Kirti without the kind support and
help of whom the completion of the project would have been a herculean task for me. She
took out time from her busy schedule to help me to complete this project and suggested me
from where and how to collect data.

I acknowledge my family and friends who gave their valuable and meticulous advice which
was very useful and could not be ignored in writing the project. I want to convey most sincere
thanks to my faculties for helping me throughout the project.

Thereafter, I would also like to express my gratitude towards our seniors who played a vital
role in the compilation of this research work. I would also like to express my gratitude
towards the library staff of my college which assisted me in acquiring the sources necessary
for the compilation of my project.

Last, but not the least, I would like to thank the Almighty for obvious reasons.

Aditi Banerjee
 DECLARATION

I hereby declare that the work reported in the B.B.A. LL.B. (Hons.) Project Report entitled
“Policies of Modi Government and its Effect on Economy” submitted at Chanakya National
Law University, Patna is an authentic record of my work carried out under the supervision of
Dr. Kirti. I have not submitted this work elsewhere for any other degree or diploma. I am
fully responsible for the contents of my Project Report.
 Contents

ACKNOWLEDGEMENT.........................................................................................................1

DECLARATION.......................................................................................................................2

RESEARCH METHODOLOGY...............................................................................................4

AIMS AND OBJECTIVES....................................................................................................4

HYPOTHESIS........................................................................................................................4

SCOPE AND LIMITATION.................................................................................................4

METHOD OF RESEARCH...................................................................................................4

SOURCES OF DATA............................................................................................................4

RESEARCH QUESTIONS....................................................................................................4

METHOD OF DATA COLLECTION...................................................................................5

Chapter 1: Introduction..............................................................................................................6

Chapter 2: Political Environment and Economic Environment.................................................8

Chapter 3: Policies of Modi Government................................................................................13

3.1. Goods and Services Tax................................................................................................13

3.2. The Insolvency and Bankruptcy Code..........................................................................15

3.3. The Benami Transactions (Prohibition) Amendment Act.............................................16

3.4. Bank Recapitalisation....................................................................................................17

3.5. The Real Estate (Regulation and Development) Act....................................................17

3.6. ‘Make in India’ Initiative...............................................................................................18

3.7. Start Up India Initiative.................................................................................................19

Chapter 4: Impact on economy................................................................................................21

Chapter 5: Conclusion..............................................................................................................23

BIBLIOGRAPHY....................................................................................................................24
 RESEARCH METHODOLOGY

AIMS AND OBJECTIVES

1. To analyse the policies introduced by the National Democratic Alliance.

2. To study the effect of NDA Government’s policies on economy.

HYPOTHESIS

The researcher is of the view that Under Modi's leadership, India emerged as the fastest-
growing major economy in the world, with its economic output expanding by 7% plus
annually.

SCOPE AND LIMITATION

 The resources on which the researcher resorts for data and information collection is
limited.
 There is time restraint which bounds the researcher.
 And, this research is limited to a particular area.

METHOD OF RESEARCH

 The methodology adopted for this research work is traditional i.e., doctrinal and non-
doctrinal.

SOURCES OF DATA

 The researcher focuses on obtaining information from both the available sources; they
are (1) primary sources of data, (2) secondary sources of data.
 Primary sources of data include first-hand information available like journals, district
plan goals, etc. and secondary sources include magazines, journals, etc.

RESEARCH QUESTIONS

The study seeks for the answer of following research question.

 What is the effect of policies of NDA government on Indian economy?

 How is the current political environment of India for business?
 METHOD OF DATA COLLECTION

 For the purpose of research work, the researcher has adopted doctrinal research
method. In Doctrinal Research Method, the researcher has collected information
through library study, books and through surfing the web.
 Chapter 1: Introduction

The general election of 2014 for electing representatives to the Lower House of the Indian
Parliament was the world’s biggest electoral exercise involving more than 814 million
voters.1 The results of the election marked a fundamental shift in India’s political landscape.
The National Democratic Alliance (NDA) led by the BJP won 337 seats in the 543-member
Lower House. The BJP won 282 seats, a large enough tally for a majority on its own.

Narendra Modi became the 15th Prime Minister of India on 26 May 2014 after leading the
Bharatiya Janata Party (BJP) to a spectacular victory. With a strong political mandate and an
almost unchallenged leadership, Modi has begun putting in place his and the BJP’s vision of
the modern India.2

Several ambitious economic initiatives have been launched during Modi’s term in office.
These include the ‘Jan Dhan Yojana’ (a scheme for providing banking facilities to all Indian
households and promoting financial literacy), ‘Digital India’ (for connecting public service
providers (government agencies) digitally to consumers (people) for efficient delivery of
services), etc.3 ‘Make in India’ is Modi’s signature initiative for transforming India into a
global hub for several manufacturing and services industries. The manufacturing sectors
include automobiles, automobile components, chemicals, defence manufacturing, electrical
machinery, electronic systems, food processing, leather, pharmaceuticals, textiles and
garments.4 The service industries are aviation, biotechnology, construction, IT, media and
entertainment, oil and gas, ports, renewables, roads and energy, highways, space, thermal
power, tourism and hospitality and wellness.

Throughout its four-decade-long history, India’s ruling Bharatiya Janata Party (BJP)
has always been divided between two viewpoints on economics: the free market model
that embraces globalisation and is private capital-oriented, or the more indigenous,
protectionist system with a significant welfare component. 5

1
Shashank Chouhan, “Facts and Figures for India’s 2014 general election”, Rebutters, 3 April 2014,
http://blogs.reuters.com/india/2014/04/03/facts-and-figures-for-the-2014-general-election/.
2
Amitendu Palit, “Economics in Narendra Modi’s Foreign Policy”, Center for Asian Studies,
https://www.ifri.org/sites/default/files/atoms/files/asie_visions77_0.pdf .
3
Ibid.
4
Ibid.
5
Hindol Sengupta, “The Economic Mind of Narendra Modi”, October 2019, Observer Research
Foundation, https://www.orfonline.org/research/economic-mind-narendra-modi-56004/ .
During its first term, the Modi government has taken several decisions on economic
policy, of which nine are key. From financial inclusion to identity and attack on black
money to corporate insolvency, these policies have dominated the discourse. 6 Some of
these policies are extensions of past ideas, a work in progress taken forward —
Aadhaar or the Goods and Services Tax (GST), for instance. Others, like
demonetisation and the Insolvency and Bankruptcy Code, are new ideas. In some such
as GST, the government received cooperation from Parliament, the States and the
media. In others, notably demonetisation, it didn’t. For good or for bad, these policies
define the direction of the Modi government’s economic thinking.  

In this paper, the researcher will try to analyse the policies of the ruling Modi Government
and its impact on the Indian economy. The researcher will also try to analyse the current
economic and political environment of the country and their effect on business organisations.

6
Gautam Chikermane, “Nine Economic Policies that Define Modi”, Observer Research Foundation,
https://www.orfonline.org/expert-speak/nine-economic-policies-that-define-modi-4/
 Chapter 2: Political Environment and Economic Environment

Business Environment

Business Environment is the most important aspect of any business. The forces which constitute
the business environment are its suppliers, competitors, media, government, customers, economic
conditions, investors and multiple other institutions working externally. William F. Glucck
defines business environment “as the process by which strategists monitor the economic,
governmental, market, supplier, technological, geographic, and social settings to determine
opportunities and threats to their firms. From this definition we can extract that business
environment consists of factors that are internal and external which poses threats to a firm or
these provide opportunities for exploitation.

Image Source: Google Images

Just like us, business operations do not survive in confinement. Every enterprise is not an
island to itself; it subsists, endures and develops within the circumstances of the part and
forces of its situation. While an individual enterprise is able to do minute to change or
manage these forces, it has no choice to reacting or modifying according to them. Good
knowledge of the environment by business managers allows them not only to recognise and
assess but also to respond to the forces outside to their enterprises. 7 The significance of the
business environment and its perception by managers can be understood if we contemplate
the below-mentioned following points:

1. Identifies Business Opportunities And Threats

2. Helps In Planning And Policy Formulation
3. Provides Useful Resources
4. Improves Performance
5. Helps In Coping With Rapid Changes
6. Enhances Business Image
7. Assist In Facing Competition
Macro Environment

Image Source: Google Images

Macro environment refers to those factors which are external forces in the company’s
activities and do not concern the immediate environment. Macro environment are the forces

7
https://byjus.com/commerce/business-environment/.
which indirectly affect company’s operation and working condition. These factors are
uncontrollable and the company is powerless and incapable of exercising any control over
them.8 The Macro Environment consists of 6 different forces. These
are: Demographic, Economic, Political, Ecological, Socio-Cultural, and Technological
forces.9

Economic Environment

Economic environment of business has reference to the broad characteristics of the economic
system in which the business firm operates. The present day economic environment of
business is a mixture of national and international environments. The existing economic
environment of business is highly complex and it is not easy to comprehend it. It is the reason
the firms operating in the same economic environment often take different decisions. The
business sector has economic relations with the government, capital market, and household
sector. These different sectors together influence the trends and structure of the economy.
Individually business firms can do little to change their economic environment.

But collectively business firms can do a lot to make economic environment conducive to their
activities. Now business firms organise the associations to influence the policies of the
government. In India, the Confederation of Indian Industry (CII), the Federation of Indian
Chamber of Commerce and Industry (FICCI) and the Associated Chambers of Commerce
and Industry of India (ASSOCHAM) are powerful organisation of the business. They
exercise considerable influence on the government and thereby attempt to mould economic
environment in their favour.

The economic condition of a country, for example level of income, distribution of income
and assets, economic resources, and stages of development are among the very important
determinants of business strategies. Economic conditions are those forces in the economy,
such as consumer buying power, consumer spending behaviour and the business cycle, that
influence organisations abilities to compete and consumers’ willingness and ability to
purchase goods and services. In countries, where investment and income are steadily and
rapidly rising, business prospects are generally bright and further investments are
encouraged.

8
https://www.yourarticlelibrary.com/business/macro-environment-of-business-economic-environment-and-non-
economic-environment/23373 .
9
https://marketing-insider.eu/macro-environment/ .
Political and Legal Environment

Every business is limited by the political environment. This involves laws, government
agencies and pressure groups. These influence and restrict organisations and individuals in a
society. Therefore, marketing decisions are strongly influenced and affected by developments
in the political environment.

Generally the government is a political institution but it has a social purpose, it provides the
ways and means of maximising social benefits and minimising social costs. In the present
world, government intervention in business activity is a hard fact. Under a democratic set up,
the ideology of the ruling party influences ownership, management and size of a business.
The rightist inclination of the ruling party will formulate liberal pro-business policies while
its leftist inclination will accept measures like nationalisation and expansion of the public
sector.

Image Source: Google Images

Political stability of the country is another factor which affects business activities. Business
thrives where there is political stability. All business firms are affected greater or lesser level
by government programmes at central, state or local bodies changes in such programmes are
usually the result of shifts in the political weather arising from changes in the attitudes,
preferences and objectives of voters and political leaders. Businessmen try to anticipate
changes in government policies or in the political forces at the back of them so that they may
be able to operate successfully.

Legal systems play a significant role in business. Business law is the complex system of
regulation that forms the legal environment of business. Knowledge of business law is
necessary for many management decisions. However the legal environment is becoming so
complex that many laws are only partially understood. The legal environment is also referred
to as public policy environment. The vast governmental network of laws and regulations,
policy decisions, government bureaucracy, and the legislative processes have raised impact
on Business decisions. 
 Chapter 3: Policies of Modi Government

Image Source: Google Images

When Narendra Modi became India’s prime minister in spring 2014 the Indian economy was
in the doldrums. There was a clear policy paralysis in India’s central government, in large
part due to the high profile corruption cases that involved the central government bureaucracy
and politicians at the time.10 Modi promised Indians that “acche din” (good days) were
coming. And there was expectation that the Indian economy would do well under a pro-
business political regime, headed by a politician known for acting strongly and decisively.

3.1. Goods and Services Tax

Modi’s biggest reform push, with the greatest impact to public finances, and the
strongest tool against tax evasion and arguably the most complex law in the history of
Independent India’s — the introduction of the goods and services tax (GST) — was
launched in the 39th month of his term. 11 The enabling mechanism was provided by
the enactment of the Constitution (One Hundred and First Amendment) Act, following
which Parliament enacted four Central laws. Further, all the 29 States enacted

10
https://theconversation.com/narendra-modis-performance-on-the-indian-economy-five-key-policies-assessed-
116485 .
11
https://www.orfonline.org/expert-speak/nine-economic-policies-that-define-modi-4/ .
enabling laws in their Assemblies, while the Centre notified it for all the seven Union
Territories. The GST replaces eight Central taxes and nine State taxes, but leaves five
petroleum products and alcohol for human consumption out of its ambit. In tune with
indirect taxes in 140 other nations, Modi has brought to completion one of India’s
longest reforms — the GST story began more than three decades ago, in 1985. The
structural reform over, minor tinkering will continue, though criticism about its
implementation, particularly the huge compliance burden for small enterprises in its
initial launch, was needless, bureaucratic and not thought through.

While the initial effect of the GST policy on the Indian economy was a negative shock, the
long-term impact is likely to be strongly positive. 12 From a macro-economic perspective, the
government and industry expected that the GST would be instrumental in reducing economic
distortions, which in turn, would provide necessary impetus to economic growth. 13 The
implementation of GST has significantly affected the Indian economy in the following ways:

 Simplification of the tax structure: GST has simplified the taxation system of the
country. As GST is a single tax, calculating taxes at the multiple stages of the supply
chain has become easier. Through this, both customers and manufacturers get a clear idea
of the amount of tax they are charged and its basis. Further, hassles of handling tax
officials and authorities can also be avoided.

 Fostering production: As per the Indian retail industry, the total tax component is
around 30% of the product cost. Due to the impact of GST, the taxes have gone down. So,
the end consumer has to pay lesser taxes. The reduced burden of taxes has enhanced the
production and growth of the retail and other industries.

 SME support: Small and medium enterprises can now register under the Composition
Scheme introduced by GST. Through this scheme, they pay taxes according to their
annual turnover. Therefore, businesses having an annual turnover of Rs. 1.5 crores only
have to pay 1% GST. Moreover, other enterprises having a turnover of Rs. 50 lakh are
required to pay 6% as GST.

12
https://theconversation.com/narendra-modis-performance-on-the-indian-economy-five-key-policies-assessed-
116485 .
13
https://www.avalara.com/in/en/resources/press/how-gst-transformed-the-indian-
economy.html#:~:text=Economic%20Impact&text=The%20Ministry%20of%20Statistics
%20and,administration%20that%20it%20got%20along.
  Enhanced pan India operations: Companies can now avoid taxation roadblocks, such as
toll plazas and check posts. Earlier, these created problems, including damage to
unpreserved products while transporting them. So, manufacturers had to keep buffer stock
to make up for the damages. These overhead costs of storing and warehousing hampered
their profit. A single taxation system has reduced these problems. They can now transport
their goods easily across India. This has resulted in the improvement of their pan India
operations.

 Increase in exports: GST has reduced the customs duty on exporting goods. The cost of
production in the local markets has also decreased due to GST. All these factors have
increased the rate of exports in the country. Companies have become more competitive
when it comes to expanding their businesses globally.

3.2. The Insolvency and Bankruptcy Code

The IBC aims to consolidate and amend the laws relating to reorganisation and
insolvency resolution of corporate persons, partnership firms and individuals in a time
bound manner for maximisation of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance the interests of all the
stakeholders.

It amended 10 Acts of Parliament and establishes an Insolvency and Bankruptcy

Board of India that has regulatory oversight over the insolvency professionals,
insolvency professional agencies, and information utilities and is responsible for
implementation of the Code. In a line: this law allows easy exit from a failing
business.

Following are the impacts of IBC on the economy:

 The introduction of the Insolvency & Bankruptcy Code, 2016 (IBC) has reduced the
time taken for winding up companies in India from over four years to less than a year.
 Through faster resolution, the Code had one major objective – to address around Rs.
10 trillion of non-performing assets (NPAs) in India’s banking system. As the asset
quality of banks gets better, it will promote new investments and consequent
economic growth.
  IBC was one of the major factors in India’s jump on the World Bank’s Ease of Doing
Business Ranking to 100 in 2017 from 130 the previous year.
 The Code is expected to be a major driver in a spurt of M&A deals in India, as
bidders are eagerly looking to acquire stressed assets that are now available at
lucrative prices and a number of such entities are close to conclusion of their
resolution processes.

3.3. The Benami Transactions (Prohibition) Amendment Act

The 31st month of the Modi government saw a tightening of a law against black
money in property. India’s long war against unaccounted-for, tax-evaded money has
been through what is known as ‘benami’ transactions through the purchase of property
in one person’s name but financed by another, who also controls it. 14 The 1988
Benami Property Transactions Act was weak — no powers of a civil court, no specific
provisions for vesting of confiscated property, no appellate structure defined.

The Benami Transactions (Prohibition) Amendment Act, in force since 1 November

2016, empowers authorities to provisionally attach and eventually confiscate benami
properties. It also carries jail terms of between one and seven years and a fine that can
be upto 25% of the fair market value of the property. Within six months of the Act
coming in force, the authorities identified more than 400 benami transactions,
including deposits in bank accounts, plots of land, flats and jewellery, with more than
240 properties with a market value of more than Rs 600 crore being provisionally
attached.

Due to the investment of black money in the real estate market, the price of properties usually
remain artificially high. The twin attack of demonetization and benami transactions
prohibition on the black economy may slow down the growth of real estate sector but in the
long run, it will bring transparency and professionalism in the sector. 15 The mellowing down
of the real estate prices and confiscation of benami properties will help the government in its
plans of affordable housing for poor. When a property has multiple ownership or false

14
Dr. Sangeetha K, “Legislation on Benami Transactions in India-a critical study”, International Journal of
Current Research Vol. 11, Issue, 11, November, 2019, http://journalcra.com/sites/default/files/issue-
pdf/37079.pdf .
15
https://www.mbarendezvous.com/general-awareness/prohibition-of-benami-transaction-and-its-socio-
economic-benefits/#:~:text=Possible%20Impact&text=The%20twin%20attack%20of%20demonetization,and
%20professionalism%20in%20the%20sector.
ownership or unknown ownership, banks are also hesitant in providing loan against such
property and conduct their own title search subtly. The benami prohibition will help boost the
lenders confidence who are currently fighting the bad debt.  It will also help in bringing the
foreign investment.

3.4. Bank Recapitalisation

India's government on 23rd Oct, 2017 announced a massive bank recapitalization plan worth
tens of billions of dollars a possible "game changer" for the country's bad loans problem. The
plan could not only provide cheer for investors worried about Indian banks' worsening
balance sheets, but it may also have far-reaching implications for the country's economic
prospects.16 Essentially recapitalisation involves providing the bank with new capital, e.g.
government agree to buy new shares. This improves the banks’ bank balance and prevents
them from going bust. Since the Government is the majority shareholder in the public sector
banks, it has to provide equity capital, if the banks are struggling. This injection of capital is
also known as the recapitalisation of banks.

Effect of bank recapitalisation:

1. Maintain a capital-adequacy ratio for the uninitiated: BASEL-3 norms are the
international banking regulations that have to follow by the banks in all countries.
According to it, the banks have to maintain a capital-adequacy ratio of at least 8 %. The
capital-adequacy ratio is the ratio of capital to the risk-weighted assets (loans etc) .
Hence, more capital is required to be able to give more loans.
2. Recapitalisation and Confidence: One issue with recapitalisation is to restore confidence.
If people have confidence deposits are secure, they won‘t want to withdraw them. But, if
they feel bank may go bankrupt then they will want to withdraw money. A
recapitalisation can assure depositors their savings are safe – preventing a bank run.

3.5. The Real Estate (Regulation and Development) Act

One of the biggest, and arguably the most called for, reforms in real estate industry in India
was the implementation of Real Estate Regulation and Development Act (RERA) in
2016. Real Estate (Regulation & Development) Act 2016 took shape paving the way for
establishing regulators at the centre, and subsequently at all state levels.
16
Vipul R. Patel, “The effect of bank recapitalization on the Indian economy”, Research Guru (Volume-
11,Issue-3,December-2017), http://www.researchguru.net/volume/Volume%2011/Issue%203/RG11-VP-45.pdf .
 The RERA move coupled with Goods and Services Tax implementation is seen as a
positive move for the sector. The main issues plaguing real estate in India were
transparency and accountability, which have been tackled now. The Real Estate sector
continues to play a key role in contributing to India's economic growth story and is one of
the largest sources of job creation, making it a strategic sector for nation-building.

Unfortunately, in the absence of a regulator, the sector has been in the past characterised by
high levels of information asymmetry, often leading to mistrust and low confidence amongst
stakeholders -- including home buyers, financiers and developers. The Real Estate
(Regulation and Development) Act or RERA passed by the Parliament of India in 2016 is a
fresh take at resolving these lacunae. The RERA Act was enacted keeping in mind the
interests of home buyers long exposed to widespread vulnerabilities, which impacted
demand and resulted in sales.

According to the World Bank's Ease of Doing Business Index, India has significantly
improved its global ranking for dealing with construction permits from 182nd to 52nd in a
span of four years supported by a steady decline in days required and processes required for
such permits. This can be improved further by closing some of these last mile gaps in
implementing RERA.17

3.6. ‘Make in India’ Initiative

Make in India is an initiative by the Government of India to encourage companies to

manufacture in India and incentivize dedicated investments into manufacturing. The policy
approach was to create a conducive environment for investments, develop a modern and
efficient infrastructure, and open up new sectors for foreign capital. The initiative targeted 25
economic sectors for job creation and skill enhancement, and aimed "to transform India into a
global design and manufacturing hub."

17
https://www.businesstoday.in/opinion/columns/two-years-of-rera-review-and-the-outlook-going-
ahead/story/343874.html .
"Make in India" had three stated objectives:

1. to increase the manufacturing sector's growth rate to 12-14% per annum;

2. to create 100 million additional manufacturing jobs in the economy by 2022;
3. to ensure that the manufacturing sector's contribution to GDP is increased to 25% by
2022 (later revised to 2025).

3.7. Start Up India Initiative

Startup India Scheme is an initiative by the Government of India for generation of employment
and wealth creation. The goal of Startup India is the development and innovation of products and
services and increasing the employment rate in India. Benefits of Start-up India Scheme is
Simplification of Work, Finance support, Government tenders, Networking opportunities. 18
Startup India was launched by Prime Minister Shri. Narendra Modi on 16th January 2016. Let us
learn more about Benefits and Eligibility of Startup India.

Benefits:

18
https://www.toppr.com/guides/business-management-and-entrepreneurship/government-initiatives-for-
business-development/startup-india-scheme/#:~:text=Startup%20India%20Scheme%20is%20an,of
%20employment%20and%20wealth%20creation.&text=Benefits%20of%20Startup%20India
%20Scheme,launched%20by%20Prime%20Minister%20Shri.
1. Self-certification of compliances under various laws
2. Intellectual Property Rights Benefits
3. Tax Exemption
4. Relaxation in Public Procurement Norms
5. Fast Track Exit Option/ Winding -up
 Chapter 4: Impact on Economy

So first point, the political environment is correct and it is very conducive to a set of reforms.
Second, there have been a set of reforms that were undertaken in the first term of this
government and that first term of the government emphasised reforms broadly in the social
area and very importantly in the economic area with the GST and the bankruptcy code. Both
were mega reforms.

Ease of Doing Business

India improved 30 places in one year to a ranking of 100 in the World Bank's 2018 global
assessment on the ease of doing business. This reflected a series of business-friendly reforms
and the streamlining of regulatory procedures. For example, India recently introduced a GST,
which provides a common indirect tax structure and unified common market. It may appear
complex to firms in the short term, with the multiple layers currently in place, but is expected
to improve the ease of doing business in the long term.

Transparency and Corruption

The Modi government has been dealing strictly with both corruption and cronyism.19 The
government had focussed on "simplification, rationalisation and transparency". Be it
demonetization or the Benami Transaction Amendment Act, the policies of the government
are inclined towards wiping out corruption from the country.

GDP

The rate of growth for India’s GDP has just about halved in just three years – from 8.3 per
cent recorded in 2016-17, the year of demonetisation. There was no respite in 2017-18, either,
when the GDP grew by only 7 per cent. The fall in the growth rate in 2019-20 would have
been sharper, but for a rebound in agriculture and government expenditure. Agriculture
growth bounced back at 4 per cent, almost double the rate in 2018-19, and public
administration, defence and other services saw double-digit growth of 10 per cent, compared
with 9.4 per cent in 2018-19. Manufacturing and construction in 2019-20 showed poor

https://www.businesstoday.in/current/economy-politics/govt-dealing-strictly-with-corruption-cronyism-pm-
19

modi/story/397765.html .
growth numbers, at 0.03 per cent and 1.3 per cent, respectively – down from much higher
numbers of 5.7 per cent and 6.1 per cent – in the year-ago period.

Foreign Direct Investment

FDI in India has followed a positive trend since the launch of Make in India. FDI
inflow from April 2014 to March 2019 ($286 Bn) is 46.94% (approx.) of the overall
FDI received in the country since April 2000 ($592.08 Bn).  For the 1 st time, India
crossed the $60 Bn mark in FY 2017 - 18 with $55.55 Bn in FDI, due to the
investment friendly policies and opening of FDI allowance in various sectors. 20

20
https://www.makeinindia.com/foreign-direct-investment .
 Chapter 5: Conclusion

At the national level, though, his economic record appears mixed. Under Modi's leadership,
India emerged as the fastest-growing major economy in the world, with its economic output
expanding by 7% plus annually.
The ease of doing business in India has also improved significantly over the past several
years, with Modi's government rolling out a series of major reforms that made it easier for
firms to get construction permits, pay taxes and trade across borders. In fact, India has risen
65 places in the World Bank's rankings of the ease of doing business since 2014.
Modi's government also managed to end some fuel subsidies and passed a new insolvency
and bankruptcy code for firms, which replaced a web of archaic laws. Furthermore, it raised
caps on foreign investment in sectors like defense and insurance, and tried to court foreign
direct investment.
The Modi administration's crowning economic achievement was to implement a nationwide
value-added tax, the Goods and Services Tax (GST), which the previous Congress-led
government had proposed. Although the GST was a landmark legislation that overhauled and
streamlined India's indirect tax regime, it has been burdened by a complex infrastructure and
criticized by both individuals and businesses for pushing up prices.
Modi also sought to make India's economy cashless. His decision in 2016 to abruptly
withdraw all high-denomination banknotes from circulation was a shocking move that
disrupted the Indian economy. The aim of this move, which came to be known as
"demonetization," was to wipe out "black money," piles of ill-gotten cash stashed outside the
banking system.
But some economists criticize demonetization as a "colossal policy failure." And the
country's central bank revealed that nearly all demonetized currency had returned to the
system, which meant that either there was no significant black money, or hoarders found a
way to legitimize most of their ill-gotten cash.
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