India Election Day: Has Modi Really Changed India?

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By Iain Marlow, Vrishti Beniwal, Adrian Leung and Hannah Dormido

Indian Prime Minister Narendra Modi wants another five-year term to continue building what he’s calling a New India—a country that is hopeful, proud and prosperous. On May 23, the world will find out if the nation of 1.3 billion people wants him to stay in the job.

How much has India actually changed under Modi? Supporters say he’s turning it into a global power with a strong economy, while critics say he’s increasing social tensions and eroding democratic institutions. The data presents a mixed picture. Modi has pushed through landmark tax and bankruptcy reforms, but poor execution of policies like demonetization have damaged India’s economy. At the same time, economic growth has not translated into labor-intensive investment or job creation. And Modi has been unable to change some of the country’s fundamental problems, from enduring poverty to terrorist attacks.

While much about Modi’s record is in dispute, one thing is clear: India’s economic rise has continued under his government. With a gross domestic product growth rate above 7 percent, India remains the world’s fastest-growing major country. Its economy has reached the level of countries like France and the U.K. and is projected to surpass them by the end of 2019. Modi also rolled out a new goods and services tax which helped India move up 65 places in the World Bank’s ranking on ease of doing business.

Still, it’s hardly been perfect. Despite Modi repeatedly blaming his predecessor for a falling rupee, India’s currency has continued to decline under Modi. It hit a record low of 74 rupees per U.S. dollar—largely due to the price of oil—before recovering. The International Monetary Fund has said his surprise move to ban 86 percent of India’s cash in a bid to crimp corruption weighed on the economy, and the launch of a national sales tax was marred by a confusing roll-out.

Perhaps most importantly, India’s strong growth hasn’t translated into prosperity for many of India’s poorest. While the government has suppressed official—and negative—unemployment data, private research from Azim Premji University showed that 7 percent-plus GDP growth has led to less than 1 percent improvement in employment. The Centre for Monitoring Indian Economy said preliminary data showed India lost an estimated 11 million jobs last year—likely concentrated among poor, uneducated women. Massive protests have broken out as concerns grow that there won’t be enough jobs for 1 million Indians joining the labor pool each month.

After taking office, Modi set an ambitious target to open a bank account for every household to ensure welfare funds flowed directly to India’s poor. His policies helped bring 345 million people into the banking system in just four years, according to the World Bank. But many of India’s villages still lack bank branches or ATMs, 15 percent of new accounts still have no money in them and the pace of building new financial infrastructure has slowed.

Total Beneficiaries

“Make in India,” Modi’s signature push to boost India’s manufacturing sector, has failed to meet lofty expectations. The sector has continued shrinking to about 15 percent of GDP in 2017, from a peak of 18.6 percent in 1995. Other data show new investments in India have dropped and stalled projects are on the rise. And while India has seen record foreign direct investment under Modi, it’s begun falling even as other countries in Asia are undergoing an investment boom.

National security

Following a terror attack in Kashmir in February that killed 40 paramilitary troops, Modi authorized airstrikes against Pakistan. Modi and party officials proclaimed his government, unlike previous ones, was standing tough against India’s adversaries. They also said their party was trying to provide the armed forces with new high-tech gear.

But that rhetoric doesn’t match reality. While Modi’s air strikes might be unique in peace time, his government has not stepped up arms purchases. Defense spending has inched up slightly, but has continued falling as a percentage of GDP. The share that goes to new equipment has also shrunk, hurting its ability to keep pace with China.

At the same time, the situation in restive Kashmir is worse than it has been in years. Terrorist incidents have doubled since 2014, and the 40 troops killed in February surpasses the total number of military deaths in all of 2015.

It’s clear opinions are divided on Modi’s record, largely along partisan lines. The only assessment that matters now is the one delivered by India’s 900 million voters.

Editors: Daniel Ten Kate, Ruth Pollard.


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