The economy at three: Three years of the NDA government have seen substantial and all-round improvements

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Abstract: 

Few disagree that when the present government took office three years back, the economy had been in great difficulty. Going by the new GDP series, growth had fallen to 5.6% in 2012-13 and 6.6% in 2013-14 compared to 8.3% during the preceding nine years. Inflation and the current account deficit were high. There was deep paralysis in decision-making, infrastructure projects were stuck in all areas, corruption scandals had been breaking out all around and investors were terrified of retrospective taxation.

Today the decision making process has been unblocked, infrastructure building has gained momentum, corruption has been reined in and fears associated with retrospective taxation have been assuaged. As a consequence, growth has been restored. The economy grew 7.2% during 2014-15, 7.9% during 2015-16 and 7.1% during 2016-17. Alongside, inflation has dropped from 8% during the first four months of 2014 to below 4% currently. Foreign direct investment during the three financial years of the government has summed to $156 billion with the flow during 2016-17 alone being a record $56 billion.

These indicators do not reflect the full potential of the economy created by the policy initiatives of the government. There are lags between the introduction of new policies and realisation of their full impact. It was many years of reforms, first under Prime Minister Narasimha Rao and then under Prime Minister Atal Bihari Vajpayee, that eventually translated into the 8.3% annual growth for nine years beginning in 2003-04.