Economic Highlights

New Delhi, 15 May 2017

NDA’s 3 Years

NEW INDIA EMERGING

By Shivaji Sarkar

Three years of Narendra Modi Government is changing the economic paradigm.  It is planning a New India campaign to continue beyond 2019. The mantra is connectivity – connecting with the marginalised and the poor through fast highways and roads, cyber routes, JAM – jan, dhan, aadhar and mobile for transferring the most coveted cash – to prosperity. It is working beyond economy with dividends at the political level as evidenced by the recent Assembly and civic body elections.

The stress on development too has changed. Despite industry and investment orientation, the focus is moving towards the strengthening of the rural agro-based economy. The ‘Make in India’ to ‘Skill India’ and ‘Stand Up India’ are creating entrepreneurship while trying to increase the size of the market by including the deprived and discarded into the system.

Foreign Direct Investment (FDI) has risen from Rs 12,343 crore ($3083 million) in 1998 to Rs 29 lakh crore ($46 billion). In 2013-14, it was $24.3 billion. The FDI is flowing in services, IT, automobiles, pharmaceuticals and construction development.

The India story is, however, different from the global scenario. Global flows of FDI fell 13 per cent in 2016 to an estimated $1.52 trillion as global economic growth remained weak and world trade volumes posted anemic gains, according to the latest UNCTAD Global Investment Trends Monitor. This possibly demonstrates a scenario of an emerging interest in India and business confidence.

The UNCTAD said India stood as the 10th most attractive destination in the world for FDIs. In comparison, China and Brazil received $139 billion and $50 billion FDI inflows respectively during 2016. The US remained the top source of FDI inflows in 2016 at $385 billion. The Wall Street Journal observes:“Most major indicators suggest India’s economy is in better shape now than it was before Prime Minister Narendra Modi took office comparing the figures of 2014 and 2016”.

In April, Wendy Cutler, former Deputy US trade representative in the Obama administration, stated: “With the young skilled workforce, India’s growth rate is going to surpass China for the coming years, as well as the market opening and deregulation undertaken by Prime Minister Narendra Modi, will make this a really important destination for foreign investment”.

The different strokes given to the economy and trying to create a new vision is making some impact. India is now gradually trying to unfold its powers in nondescript destinations. Despite many problems of demonetization and the harrowing time the citizens faced, overall it created a favourable opinion for an action-oriented and risk-taking government particularly among the commoners.

The appreciation of the rupee by over Rs 4 to Rs 64 to a dollar is creating a favourable investment climate. It is being seen as a sign of a resilient economy. This apart, now the International Monetary Fund and ESCAP of the UN agree that it has little linkage to export growth.   

The stress is on making a difference to the lives of India’s poor by changing the architecture of inter-government finances. It has covered 84 schemes over 65 ministries and departments till December 2016 and targets 536 schemes. The DBT is catching up. Over 50 per cent of allocation for LPG subsidies and 65 per cent of the National Social Assistance Programme benefits were transferred to bank accounts.

MGNREGA too was given a new lease of life on account of drought conditions in many parts of the country, and has recently received a supplementary grant on account of the increased demand in December. The Centre had released Rs 55,076 crore for MGREGA – the highest allocation so far since the programme was launched.

While MGNREGA has often been criticized, it has nevertheless helped the rural poor. It has aided them earn cash, something elusive in remote areas. The move has made many of them buyers of goods. This is expected to prop up the rural market and gradually add to the nation’s manufacturing growth.

The NDA has been trying to project an image of being pro-farmer after the amended land Bill was passed. In 2016, Modi shared his dream of doubling farmers’ incomes by 2022. Apparently, during the past over a year a number of schemes related to farmers have been launched, including irrigation -- Pradhan Mantri Krishi Sinchayee Yojana; traditional bio-farming -Paramparagat Krishi Vikas Yojana;  Pradhan Mantri Fasal Bima Yojana, Soil Health Card and National Agriculture Market (e-NAM).

The schemes are making slow but steady changes and are integrating the rural farms to the national market hubs. In some areas in Uttar Pradesh, Madhya Pradesh, Rajasthan and West Bengal, the farmers are now getting better market for their produce. The e-NAM that was introduced first in MP has come to help the farmers through a unified market, though still in many cases it is just the beginning.

New India is the largest producer, consumer and exporter of spices and spice products. India's fruit production has grown faster than vegetables, making it the second largest fruit producer in the world. Its horticulture output, is estimated to be 287.3 million tonnes (MT) in 2016-17 after the first advance estimate. It ranks third in farm and agriculture outputs. Agricultural export constitutes 10 per cent of the country’s exports and is the fourth-largest exported principal commodity. The agro industry in India is divided into several sub segments such as canned, dairy, processed, frozen food to fisheries, meat, poultry, and food grains.

It is also stated that contrary to perception, farmers are into digital transactions more than many urbanites. They voice complaints about the digital connectivity in their areas and particularly against the public sector BSNL. Even some of the newly launched telecoms are unable to provide the speed as promised.

The digital connect that Modi boasts of has to be more effective than it is being officially claimed. The One-India concept gets hampered if the real speed is less than what the farm sector wants. In this New India, farmers are no more symbols of deprivation and backwardness though they still have to grapple with economic issues.

India is changing indeed. Now no government can ignore the farm or rural sector. In a short while, that is where the happenings would be, away from the urban malls. The GDP may grow beyond projections. The growth would be more pervasive as signs of an emerging New India are perceptible. ---INFA

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