Did India got the “Achhe Din” he promised?
He has been running a massive India marketing campaign all over the world, which is good but as they say, “Half of the marketing goes waste, and you do not know which half.”
I thought of doing a status check on some of the macroeconomic factors that drive the country’s economic stability and growth. India has been in a sweet spot where China is slowing down, Russia almost at the edge of the war, and Oil Prices at all time low, India poised to 7.4% GDP growth rate based on the World Bank data.
|India GDP Growth ($ 2.1 Trillion)||5.1 %||6.9 %||7.4 %||India growing – True|
|China GDP Growth ($ 10.4 Trillion)||7.8 %||7.7 %||7.4%||China Slowing – True|
- Good news– India is way ahead of Russia and Brazil where the GDP growth rate is less than 0.5%, India growth rate increased.
- Bad News – India no way close to China.
India’s favorite topic of any election campaign is “Remove poverty”, every political party; every candidate has talked about this issue, I think the country has been going fairly well, we can debate, it is not enough if we compare with the developed countries.
But the question that I have – do we see a positive displacement on the ground?
The previous government did a good jo`b from 2004 to 2011; with more than 40 percent people were leaving below the poverty line in the year 2004 that came to 22 percent in 2011.
Mr. Modi would get his numbers in 2015 when World Bank publishes Poverty headcount ratio at national poverty lines (% of the population) numbers.
- Good News – Seems like numbers would be better than 2011
- Bad News – Numbers way below any of the BRIC nations
S&P Sovereign country rating for India 2015 – “BBB” – Helps countries getting loans at lower rates and the cost of capital reduction
- Good News – Better than Russia and Brazil.
- Bad News – Lower than China
Corruption has always taken the center stage in India, with big scams during the Congress rule and was the primary reason Anna Hazare started one of the greatest revolutions in India post independence, which led to the formation of new political parties in India and youth getting involved and informed with the politics in India. Mr. Modi has debated a lot on corruption during all though out his election campaign, but what has changed on ground India moved nine ranks above from 94th to 85th in 2014.
- Good News – Better than Russia, China
- Bad News – Lower than Brazil, and way below the world tally, still much work needs to be done to stop tax leakages and black money
Corruption Perceptions Index
The most used indicator of corruption is the Corruption Perceptions Index of Transparency International (TI). This index is based on 13 independent surveys, measuring public sector corruption for 178 countries. On a ranking of 0 to 10 (0 being highly corrupt and 10 being highly uncorrupt).
Last few months there has been a debate raising the question of Indian Democracy. I think India is one of the greatest democracies in the world, to back my thought I looked at the Democracy Index.
Democracy index measures 167 countries using 60 indicators in five areas: civil liberties, the electoral process, government function, political culture, and political participation. It uses a 10-point scale (0 being least democratic and 10 being most democratic)
- Good News – Better than Russia, China and ranked 27th in the world
- Bad News – Election participation is less usually only 55-65% voters cast their vote
How free are you in India?
I think it is the best place in the world; India matches shoulder with all the developed countries in the western world. Middle East, Eastern European and African countries have never been in a high spot regarding the civil liberties.
Freedom in the World is an annual survey that focuses on political rights and civil liberties.
Inflation is the biggest friction force in any developing countries and has been one of the Devils that has toppled governments in past in India, Mr. Modi, and RBI governor is under tremendous pressure to control Inflation in India, there has been some significant moves by the government to control it. Reserve Bank of India (RBI) has reduced 1.25% in Repo rates making EMI’s going down in last 1.5 years, which gives a sense of relief to the common man.
Based on World Bank report
|Inflation, consumer prices (annual %)||9.3 %||10.9 %||6.3 %||Still very high|
|Wholesale price index (100)||117.7 %||125.1%||130%||Very High|
Skill Development in India has been Mr. Modi’s focus areas, where he mentioned across the global platforms. India is in a real bad shape, ranks 130th in the world based on Human Development Index, conducted by United Nations, Countries are rated based on the following factors: education level, literacy rate, years of schooling, income, life expectancy, and standard of living.
Ease of doing business – India has made a significant jump in doing business, but it still lags a mile against any BRIC economy. It is still very difficult to do business in India.
There is some comfort coming in from domestic factors and the economy has slowly started reflecting in the numbers positively towards the policy changes initiated by the Narendra Modi government. The government has done a fairly decent work in most of the areas but missed out on two of the high profile bills like GST and Land acquisition bill. Rising retail prices and the dollar at 67 has been the top concerns as the rupee has not depreciated a lot. We need to wait and watch another year before #Digitalindia,#MakeinIndia, etc. shows some results on the ground.
Disclaimer – I have no relations with any political party, these are my personal views. The reason for this study is to examine the various macroeconomic factors, and how India is ranked today compared to a year before.