In 2014, India got its new prime minister, Narendra Modi. Bhartiya Janata Party won by a revolutionary parliamentary majority.
India was already a developing economy with huge potential. Two years since the Modi rule, it still has a lot of potential. The optimists predict that India will soon be the second-largest economy in the world.
Though Modi has taken a lot of significant decisions in the past two years, the recent policy of ‘demonetisation’ has been of utmost importance. It may have tremendous positive impact in the long run, but right-now it has left a number of people with no cash for the entrepreneurial ventures. With limited bank withdrawals, economists fear that the negative impact on growth will prevail in the new year as well.
In a recent study by Swaminathan S. Anklesaria Aiyar, of Cato Institute, related how in the 1980s the current head of a software company needed one year to get a phone and three years to win permission to import a computer. He wrote, “India was perhaps the only country in the world where improving productivity (and hence exceeding licensed capacity) was a crime.”
Amongst other decisions, Narendra Modi’s decision to eliminate the requirement for minimum capital requirements and government certification to start a business, is highly beneficial. Amit Chandra from the Centre for Civil Society predicted that this reform would create “a level playing field for all entrepreneurs, big or small.” It will definitely reduce one of the major reasons of India’s informal economic activity.
The Narendra Modi government has also finally won parliamentary approval for a uniform goods and services tax (GST). GST is intended to replace the current complicated tax structure levied by the union. Finance Minister Arun Jaitley said, about the GST, it would “facilitate seamless transfer of goods across the country and bring a lot of financial equity.”
Economic progress in India is noticeable, as it ascends internationally. Prime Minister Modi’s government proudly points to incessant high growth rates. With a lot of substantial growth potential, India needs economic reforms to maximise the output.