Why India is on the Path to Long-Term Prosperity
Abstract:
When Prime Minister Narendra Modi took office in May 2014, India faced major economic challenges. Growth had plummeted to 5.9 percent during the last two years of the outgoing government, down from a nine-year average of 8.2 percent. During the same two years, inflation had averaged 9.7 percent. Meanwhile, the government was in the grip of paralysis, unable to rein in corruption or complete large projects and in need of key structural reforms.
Four years later, the Modi government has largely succeeded in addressing these problems. On average, inflation has come down to 4.3 percent and growth has climbed to 7.3 percent over the last four years. Bold steps such as the demonetization program in November 2016 have been effective in curbing corruption. And the government has introduced numerous efficiency-enhancing initiatives, such as the replacement of a complex set of central- and state-level taxes with a single goods and services tax (GST). Taken together, these policies put India on the path to long-term growth and prosperity.