Global News

While most world capitals have been waiting for significant economic reforms since Prime Minister Narendra Modi’s election to office in 2014, his government has prioritised social reengineering over economic growth in India.

Putting vote-getting religious sentiments above economic and strategic goals has diminished the enthusiasm with which other countries support Indian foreign policy.

And as a result of lacklustre economic policies, India’s rate of growth has declined to 4.5 per cent. What was once described as the fastest growing economy in the world, is now in its worst phase in 42 years.

Unemployment is at an all-time high, industrial production is not growing and investment is declining. The agriculture sector is in distress, and the fast-moving consumer goods sector is seeing its ‘worst slowdown’ in a decade.

It is clear more than ever that social division and strife do not attract investment and is not conducive to economic growth.

Economic slide

For a nation of more than one billion people, such stagnation does not augur well. Global rating agencies Fitch, Moody’s and S&P have cut their forecasts for India’s growth. The World Bank and the International Monetary Fund have also dampened their past optimism about India, noting that India’s slowdown is diminishing the prospect of global economic expansion.

For many observers, the situation is disappointing because of the hopes they pinned on the rise to power of a conservative government in New Delhi. When he was first elected in May 2014, Modi promised ‘minimum government, maximum governance’. He brought to his office the image of a business-friendly chief executive whose no-nonsense style of functioning had brought prosperity to Gujarat when he was its chief minister.

In 2015-16, India’s GDP stood at US$ 1.99 trillion and it had a labour force of 860 million people. Both the World Bank and the International Monetary Fund predicted that India’s economy would grow between 7.3-7.5 per cent over the next two years. The World Bank even asserted that a “resilient” India would help drive economic growth in South Asia. But now India’s eastern neighbour, Bangladesh, has become the fastest-growing economy in the region.

And the latest Budget offers little hope of reviving India’s stagnant economy.