100 days of Modi govt: Hits and misses on the economic front

Depending on who you ask, the first 100 days of the Modi 2.0 government are either all about "development, trust and big changes" or "tyranny, chaos and anarchy". Not surprisingly, the latter description was from the Congress party while the NDA government has come out with a report card, 'JanConnect: 100 Days of Bold Initiatives & Decisive Actions', on the government's initiatives in its second term so far.

At the event, Minister for Information and Broadcasting Prakash Javadekar said that "no other government in the past has taken so many people-friendly decisions in its first 100 days in power".

However, the Congress Party took to social media to post various disappointing figures putting the spotlight on the economic slowdown that has the country in its grip. "Congratulations to the Modi Govt on #100DaysNoVikas, the continued subversion of democracy, a firmer stranglehold on a submissive media to drown out criticism and a glaring lack of leadership, direction & plans where it's needed the most - to turnaround our ravaged economy," Rahul Gandhi tweeted on Sunday.

Sifting through the war of words, here is a detailed look at the hits and misses of the government on the economic front. Let's look at the achievements first:

• Helping hand to banks

On August 23, Finance Minister Nirmala Sitharaman announced the first shot of the stimulus package with an upfront disbursement of Rs 70,000 crore to recapitalise banks, a set of administrative measures to speed up GST refunds and reduce meddling of tax authorities.

A week later, she announced the mega merger of 10 public sector banks into four large entities to revitalise the banking sector, tackle the NPA problem and give a boost to the economy. Punjab National Bank will merge with Oriental Bank of Commerce and United Bank to form India's second largest bank. Canara Bank and Syndicate Bank will merge to form the fourth largest bank. Union Bank of India will merge with Andhra Bank and Corporation Bank to form the fifth largest bank. Finally, Indian Bank will be merged with Allahabad Bank. With this the number of public sector banks will come down to 12.

• FDI relaxations

The Union Cabinet recently tweaked the foreign direct investment rules (FDI) to make investments in sectors like mining and single brand retail more attractive to overseas players. The changes will not only result in making India a more attractive FDI destination, but also boost economic growth, promote Make in India and generate employment along the way.

The first quarter of the current fiscal saw Foreign Direct Investment (FDI) equity inflows jump by 28 per cent year-on-year to $16.33 billion, as per latest figures released by the Department for Promotion of Industry and Internal Trade (DPIIT). For the April to June period last year, the figure stood at $12.75 billion.

The uptick in FDI equity inflows is more impressive on the quarter-on-quarter basis - up over 50 per cent from $10.8 billion in Q4FY19. The total FDI inflows , including re-invested earnings as well as other capital, on the other hand have shot up 26 per cent (y-o-y) to $21.3 billion in the June quarter of FY20.

• Special Economic Zones (Amendment) Bill

The amendment bill, passed by both Houses in June, allows "trusts or any entity" to set up units in Special Economic Zones (SEZ). The move is expected to boost investments, while promoting exports and job creation. "Investments of $1.1 billion proposed since ordinance was promulgated earlier this year," the JanConnect report claimed.

Commerce and Industry Minister Piyush Goyal told the Rajya Sabha while piloting the Bill that the government had already received eight applications from trusts of reputed companies proposing a total investment potential of Rs 8,000 crore. The SEZs have contributed significantly to the economy. According to Goyal, the SEZs had generated 20 lakh jobs, brought investments worth Rs 5 lakh crore, with exports worth Rs 7 lakh crore by the end of March 2019.

• Boost to infrastructure

Modi government has set up a task force to draw up plans for building infrastructure worth Rs 100 lakh crore ($1.4 trillion) over the next five years.  The finance ministry said a task force under the chairmanship of Secretary (DEA) has been constituted to draw up a "national infrastructure pipeline" from 2019-20 to 2024-25. The national infrastructure pipeline project would include greenfield and brownfield projects costing above Rs 100 crore each.

The government has also set up two cabinet committees to spur investment and create jobs, in line with the GDP target. According to Javadekar, the PM will head these two panels, namely Investment & Growth Panel and Employment & Skill Development Panel.

• And the many misses

On the other hand, bad news is also beginning to pile up. India's GDP growth rate dipped to a six-year low of 5 per cent during the first quarter of the ongoing fiscal. According to Javadekar , "the current economic situation is temperate and there is no need to panic". He pointed out that the world economy had been facing slowdown and India was "behaving accordingly", adding that the government has been taking steps to revive the economy in recent times.

• Decelerating economy

Growth in eight core sectors slipped to 2.1 per cent during July against 7.3 per cent during the corresponding month last year, as per the latest government data. The manufacturing sector fared even worse, growing at an abysmal 0.6 per cent. The country is now looking at a below 6.5 per cent growth in 2019-20 - against earlier predictions of 6.7 -7 per cent - unless something drastic happens in the economy. The government's redressal measures so far have disappointed all those who were rooting for a fiscal stimulus.

• Slowdown in the auto sector

The auto sector is in the midst of an unprecedented and protracted slowdown, with automobile demand shrinking for the 12th month in a row. In the face of accelerating showroom shutdowns and nearly 3 lakh job cuts, the stakeholders are getting antsy. Last month, the FM rolled out a series of measures for this sector, including hiking depreciation benefit on all vehicles from 15 to 30 per cent. She further deferred the proposed multi-fold increase in registration fee till June 2020 and reversed a five-year old ban on government purchases to provide a boost to the domestic automobile industry. All eyes are now on the upcoming GST Council, which is scheduled to meet in Goa on September 20, to see if the long-awaited reduction in the GST rate from 28 per cent is finally announced.

• Job losses

The auto sector is not the only one that is seeing large scale job cuts -- several other sectors, including realty, are in the same boat. Moreover, according to Centre for Monitoring Indian Economy, India's unemployment rate has again hit a three-year high of 8.4 per cent in August 2019. With this, India's unemployment rate is at its highest since September 2016.

With PTI inputs

(Edited by  Sushmita Choudhury Agarwal)

Also Read: Auto crisis: India records worst-ever drop in monthly passenger vehicle sales in August

Also Read: Auto slowdown: Ashok Leyland announces more non-working days

Also Read: Tax on online ads on Google, Facebook makes govt richer by Rs 939 crore