How numbers burst Modi government's development bubble

Kamal Mitra Chenoy
Kamal Mitra ChenoyJun 29, 2016 | 20:13

How numbers burst Modi government's development bubble

By now volumes of academic papers and editorials on Modi government's development agenda are in circulation.

Available statistics show economic policies under this regime have continued in the growth rate pattern of its predecessors. For example, the average GDP growth rate (in per cent) of the NDA (Vajpayee, 1999-2004) was 5.8; UPA I (2004-09) was 8.0; UPA II (2009-14) was 6.9; and Modi (2014 onwards) 7.4.


The food grain production in million tonnes over the last four years, starting with 2012-13, is 257.

1. 265, 252 and 253.

2. Poverty that is defined by calorie norms (official benchmarks of defining poverty) of 2,200 per person per day in rural areas, and 2,100 per day in urban areas, led to rural poverty of 58.5 per cent in 1993-94.

In 2011-12, which was a peak output year, those defined as poor were 68 per cent. In these two years, urban poverty was 57 and 65.

Since the two Modi years which were marked by drought, had lower food grain output, poverty must have increased.

However, Amartya Sen and Jean Dreze estimated poverty in 2011-12 to be 68.7 per cent, but this was based on purchasing power parity (PPP) and would give higher figures than those based on official nutritional criteria.

Export figures have also been disappointing. For 17 consecutive months until April 2016, the last month for which there is official data, the growth of merchandise exports in dollar terms in each month over its level a year ago has been negative.


For the fiscal year 2015-16, the decline in dollar value of exports has been 15.85 per cent.

PM Narendra Modi with Union finance minister Arun Jaitley and Niti Aayog chief Arvind Panagariya.

In comparison, NDA's export performance with others is striking. The figures are given in terms of average annual increase in exports in percentages. The NDA regime (Vajpayee, 1999-2004) had an increase of 22.0. The UPA I increased by 37.3, whereas the UPA II increased by 38.7, while the Modi regime's exports actually fell to -3.6.

India has avoided a severe balance of payments crisis because of the fall in oil prices which has also restricted imports in dollar terms.

Another important indicator is the Index of Industrial Production (IIP). The variations of the IIP has been mapped from 1999-2000 to 2014-15.

During the NDA (Vajpayee) regime, the IIP increased by 6 per cent. In the UPA I government, IIP increased by a high 12.5 per cent, falling to a low of 3.7 per cent in the UPA II regime.

In the Modi regime, IIP has fallen further to 1.6 per cent. The growth of national income as measured in Gross National Income (GNI) also shows that the Modi government has not outperformed its predecessors. The average GNI growth rate in percentages is: NDA 5.8, UPA I 8.1, UPA II 7.4, and Modi 7.4.


In sum, the performance of the Modi government is about average in comparison with the previous governments.

However, in many cases it is lower than the high point reached by UPA governments.

Its GDP performance is below that of UPA I, but marginally higher than UPA II. The Modi government's GNI performance is about the same as UPA II.

Commentators have pointed out that the fairly strong growth of UPA II despite of the scandals and policy paralysis in the later years of the administration.

In contrast, under the Modi regime, exports have slumped very badly.

Has the Niti Aayog lived up to its hype? Not exactly.

Though we are referring to the comparative contribution of various regimes, we should remember, all these regimes more or less followed IMF-World Bank policies, later clearly termed neoliberalism.

There should be more informed debate on why our economy has not performed better in significantly reducing poverty, improving GDP growth, persistent continuing weak growth in gross national income, and a disastrous exports performance, undercutting the current government's commitment to "Make in India".

It doesn't appear that the tinkering with policies, or doing away with institutions like the Planning Commission, have led to more significant, "non-ideological" solutions to long-standing problems.

Does this require a significant change in macro-economic policies, if not a more sweeping overhaul?

Last updated: June 29, 2016 | 20:15
Please log in
I agree with DailyO's privacy policy