Economic Reforms in India: Debunking the Misconceptions Surrounding Narendra Modi

Introduction

The Indian economy has faced several criticisms over the past few years, with some attributing its slowdown to the controversial and game-changing reforms during the Narendra Modi government's first term, particularly demonetisation and the implementation of the Goods and Services Tax (GST). This article aims to provide a comprehensive analysis of these reforms and the other significant changes initiated by the government, debunking the misconceptions and providing a balanced view.

Significant Reforms

1. Reduction in Resolution Time of Bankruptcy Law

The government has made significant strides in reducing the resolution time of bankruptcy law from 4 years to 8 months, significantly improving the business environment and ensuring quicker resolution of insolvency cases. This change has played a crucial role in the overall economic growth of the country.

2. Push Towards Digital Transactions

With the introduction of measures such as caps on cash transactions UPI, the unified payments interface, has crossed 1 billion transactions in a week. Additionally, limits on cash withdrawal from bank accounts have further encouraged digital transactions, reducing the cash economy's prevalence in the country.

3. Modernization of Tax Infrastructure

The government has highly modernized the IT infrastructure in critical statutory bodies like the Income Tax Department, ED (Enforcement Directorate), and GST to detect tax evasion and enhance revenue collection. This measure has also included linking Aadhar to PAN and bank accounts, introducing biometric IDs, and tracking multiple bank accounts and benami bank accounts.

4. Reduction in Legacy Laws

Over 1000 obsolete laws have been retired or amended to adapt to the changing economic landscape. This measure has paved the way for more efficient governance and simplified regulatory compliance for businesses.

5. Mandatory Registration of Businesses

Now, even businesses with a turnover less than $200,000 annually are required to pay GST. This has ensured that small businesses are also contributing to the tax pool, enhancing revenue generation for the government.

6. De-registration of Benami Companies and Directors

Over 3 lakh benami companies and 4 lakh dummy company directors have been de-registered. These measures aim to curb money laundering and tax evasion, bringing more transparency into the financial system.

Necessity and Impact of Reforms

The number of reforms in a short period has led to some resistance and economic slowdown, but it is important to note that these measures were necessary for India to become a global economic powerhouse by 2025. According to experts, these reforms were required despite the challenges and immediate impacts on businesses and employment.

Historical Analogy: Economic Reforms of 1991

Similar to the economic reforms of 1991, which initially led to a slide but later resulted in significant economic growth, the recent reforms are expected to have a positive impact in the long term. The reforms by the NDA government not only bring in the informal economic segments into the formal sector but also aim to boost economic growth.

Conclusion

The Indian economy, like a patient needing surgery, has undergone substantial reforms to ensure a healthier and stronger economy in the future. While post-reform, short-term setbacks are inevitable, the long-term benefits of these measures are expected to outweigh the immediate impacts. One can be confident that the patient will recover and thrive, ensuring sustainable economic growth and development.