What does Modi 2.0 mean for the economy?

On 30th May 2019, the BJP led NDA Government became the first non-Congress party to come in power for two consecutive terms. With being in power again, come more expectations and promises that the Modi Government needs to fulfill to respect the decision of the voters. The economy being a subject that concerns us all, Cedrus Wealth Partners tries to find out - what does Modi 2.0 mean for the economy?

The Indian stock market saw a rocket high after Modi’s Government was elected for a second term, showing that the investors were happy to see the current government continuing as it affirms stability in the country. It enables present plans in plans to process without any delays as with the same government, rules are not bound to change drastically.

The Modi government in its first term introduced some revolutionary changes like GST and Demonetisation that caused a major stir in the country. Although GST has been in place for quite some time now it is necessary that the government clears out the problems being faced at ground level.

That being said, as economists mention, Governments are more likely to make drastic reforms in their first term and follow a more stable approach in their following term. It's best if this statement holds true with the Indian economy as right now what is needed is structural reform, rather than a short term fix.

Challenges in front of the Modi Government

India’s growth rate slowed down than the projected rate as well, which makes it of prime importance for the government to build a plan that focuses on meeting the projected rates with reality.

Another problem being faced by the economy of the country is the decrease in consumption by the people. People are buying fewer cars, electronics and other goods which is causing a slowdown in the economy. This can be fixed if the government gives out more money to the people, which will result in them spending more in the country. However, with the present situation of debt in the country, it can be a problem to implement.      

The slowdown in exports is another problem the government has to resolve.  The exports of leather and leather manufacturers peaked at $6.2 billion in 2014-2015. In 2018-2019, they were at $5.3 billion. The exports of ready-made garments reached a peak of $17.4 billion in 2016-2017. In 2018-2019, they were at $16.1 billion. When it comes to agriculture and allied products, the exports peaked at $43 billion in FY14. In FY19, they stood at $38.5 billion. The fact that the numbers are going down calls for the urgent attention of the government and are a major challenge in front of the government.  

Apart from this, the Modi government has also been accused of faking GDP numbers to show that the country was growing faster than it actually was. However that being said, India’s economy has an astounding potential to grow and as the government has been elected for the second term, the entire country from the common man to the business tycoons are looking forward to seeing what the government has in store for the economy of the country.

Cedrus Wealth Partners has put forth its opinion on what Modi 2.0 could mean for the economy of the country. What are your opinions? Let us know! And for more such blogs, keep following us!

Cedrus Wealth Partners
Pune, Maharashtra.
www.cedruswealth.com