Modi-fied India

I highly believe in this statement: "One person can change your life. For good or for bad." Either way, he or she can. From being one of the five bankrupt nations in 2014 to being the world's 5th largest economy, India has come a long way. All of this was possible only because of nation-first policies and a nation-loving government. Yes, this blog is going to be a little biased, but I will make sure to present only facts. I started this blog page by writing about the LPG policy of 1991. If you have read the blog carefully, you will be aware of the fact that India was one week away from declaring bankruptcy in 1991. Our forex reserves were almost negligible, leading us to beg for a loan from the IMF to pay off our import bill. How is it possible that a nation with 83 crores of population and an average tax rate of 40% was unable to pay off its import bills? What will we call this? corruption or mismanagement of funds? 

Thankfully, this is not the picture anymore. Indians are a bunch of happy people, enjoying three meals a day, decreasing inflation, rising stock markets and investments, and enjoying the perks of being an Indian. India's growth in the last five years has been greater than what we have achieved in the last two decades. It's an amazing story because the people who led it are amazing, and of course, the person narrating it is amazing as well. So, let's dive into the story of a general and how his comrades changed how we live today. This journey has been a collection of small wins and what better win to talk about first than the way India fought with Covid. 

The world's most populated country went into a lockdown on 25th March 2020. For someone like me who had never even heard the term pandemic before, a nationwide lockdown was something that I thought will throw India back into the 1990's. Cases were rising, the oxygen supply was decreasing, beds occupancy was decreasing like RCBs scorecard, and businesses had stopped production. Among this chaos, the first thing that the government did was to secure the lives of people who secure our lives. No, I am not talking about LIC. I am talking about our hardworking farmers. The government, via direct benefit transfer, credited farmers with sufficient amount of money, that would help them buy raw material so as to keep the food supply running. Almost 3 crore farmers were directly benefited via NABARD, and more than Rs 90,000 Cr were distributed. This turned out to be one hell of a decision. Priority manufacturing of masks, oxygen cylinders, hospital beds, PPE kits, and related medicines was undertaken in order to meet the basic needs. 

Nifty had crashed to 7511 from a high of 18000. India VIX (fear index) was at 82 (above 18 is bad). It is hard to believe that 5 years down the line, Nifty has touched an all-time high of 22,775 and VIX is trading at 18 years low on 10. I don't think that India has been credited as much for covid management as much for other things. America, the America which claims to have 89% of Harvard graduates working there, wasn't able to handle their economy and are still in doldrums. Debt per capita is at the highest levels Americans have ever experienced. To add salt on their wounds, the Biden administration is thinking about increasing capital gains tax from 20% to 44%. Thankfully, our honorable PM was part of an organization that teaches more about crisis management than about discounted cash flow, market efficiency, or open market operations. 

GST was the reform of reforms, and Mr. Modi did pull it off with great success. The taxpayer base has nearly doubled since its launch and collections too have risen. Monthly GST collection reached an all- time high of Rs 1.87 Lakh Cr in April 2024, showing a growth rate of 11.7%. Majority of the largest states have reported a 20% plus GST growth over the same period last year, indicating a broad-level growth across sectors and states. E-way bill generation surged to 9.73Cr in February. This is the highest in four months and also the second all-time high. Just to give you the gigantic size of GST collections, the tax revenue earned by the government in FY 23-24 was Rs 19.45 Lakh Cr and the annual GST collection in FY 23-24 was Rs 20.18 Lakh Cr. 

The next thing on the list is the launch of UPI. Modi is probably the first Indian PM to leverage technology to much for welfare program. His government's UPI has revolutionized India's economy by facilitating digital payments even in villages. Behind the huge digital payments infrastructure that has come up in India stack, a set of open APIs and digital public goods that aims to unlock the economic potential of identity, data, and payments at population scale, such as Aadhaar, UPI, Digi locker, etc. In FY 23, the UPI platform processed 8376 crore transactions aggregating Rs 139 lakh Crore. Over 11,765 UPI transactions worth Rs 182 lakh Crore were processed in 2023, up 59% in terms of volume and 45% in terms of value compared to 2022. Many Foreign nations have appreciated the work behind the concept and have started accepting UPI payments. Countries like Singapore, Malayasia, UAE, France, Nepal, Mauritius, and Sri Lanka have accepted UPI payments.

 France has gone out of their way and have allowed UPI while fetching tickets for the Eiffel tower. UPI has revolutionized India's payment sector and becoming more accessible to non-resident Indians in several nations. Merchant payments on UPI are expected to reach $1 trillion by FY 26, driven by a growth rate of 40% to 50%. Point of sales terminals are expected to double to 13 million by FY 26 from around 6 million currently. We know that UPI has been a success when we look at small vendors in the remotest areas using the system. 

The next scheme that has been a success is the Direct Benefits transfer scheme. In 1980, PM Gandhi said that out of ever y Rs 1, only Rs 0.18 reaches the poor. The DBT has changed that. With the help of the JAM (Jan Dhan + Aadhar + Mobile) trinity, the Modi Government achieved the feat of transferring subsidies directly to people through their bank accounts. Also remember, whenever I quote Mr. Modi. I am talking about his entire team. He is just the face. The DBT reduces leakages and delays while bringing transparency and accountability to the process, thus saving the 85 paise that used to go missing from a rupee. Financial inclusions not only help with disbursal of benefits but also increases India's market size and financial inclusions. India saved $27 billion in key central government schemes through DBT as it is swift and eliminates corruption. Still, the crooks who want to indulge in corruption always find a way. 

The next big change that came into the force was the Insolvency and Bankruptcy code. Before IBC was implemented, companies under bankruptcy proceedings would take inordinately long time to be liquidated. Nearly half of the cases took more than 10 years and 15% more than 25 years to complete. The IBC provided for a market-linked and time-bound resolution of stressed assets. The IBC made it easier for banks to recover their defaulted loans. It offered a one-step mechanism for distressed businesses to resolve insolvency in an efficient and time-bound manner. It was necessary reform when India's PSU banks were saddled with bad loans. Large, stressed assets, assets that were very difficult to get rid of from the lenders balance sheet, gave lenders only two options. Either write them off or keep hoping for recovery, leading to sky high NPA (non-performing assets) ratio. 

Major lenders for big infrastructural projects in India were our public sector banks and hence they were the most affected. IBC gave them a platform to get rid of their bad loans more quickly. Transferring bad debts to asset reconstruction companies fetched at least 80% of their value instead of 100% write off. PSU banks were sitting on destressed loans of more than Rs 3 Lakh Cr from 300 companies. The average NPA ratios for PSU banks fell from 8.96 in 2018 to 5.42 in 2022. This was a record decline in NPAs. It was because of IBC and ARC concept; India is the only country today where loan demand is rising in double digits when the central banks are increasing interest rates (loan demand should go down when interest rates rise). The PSU banks are stronger that any private sector bank today. 

The next gigantic decision of the Modi Government that has transformed our lives if the Make in India initiative. This project was undertaken to decrease India's reliance from service-based economy. Dependency on one type of revenue source for a nation would leave the nation with similar economic condition that Sri Lanka was facing 2 years back. Services have contributed more than manufacturing to India's economy. To boost the Make in India initiative, the government also came up with something called as the PLI scheme. The production linked incentive scheme provided special incentives for companies that were willing to undertake manufacturing. 

The PLI scheme turned out to be a game changer as it helped MSME's with increasing employment and increasing India's manufacturing revenue. Many nay-sayers doubted this decision in 2014 but today, companies like Apple, Micron, TSMC, Kia, Mercedes, are all happily manufacturing their products in India and are exporting it to other nations. Instead of giving you an example, I would urge you all to go on Google and search for Apple's exports in the last financial year. That has been achieved in 2 years. The best is yet to come for India's manufacturing sector. Defense manufacturing will see a lot of growth in the years to come.  

Even though all these developments have been undertaken under the leadership of Mr. Modi, a leader is always incomplete without his genuine followers. Ministers like Piyush Goyal, Ashwini Vaishnav, Nirmala Sitaraman, Dr. S. Jaishankar, Rajnath Singh, etc. have equally contributed to India's growth story. It wouldn't be fair to say that Mr. Modi is completely white. Just like every other human out there, he has a few gray traits as well. From waving off charges against politicians after joining the BJP to not taking firm action on events that took place in Manipur, to defending a politician who was charged with serious offense against a woman, to allowing bankrupt businessmen to participate in the country's defense deal. Mr. Modi talks about democracy, and ironically, all the media houses are either directly or indirectly owned by three big businessmen in India who are very close associates of him. It is almost like he uses these media houses to polish his character and to degrade that of others. Not kidding, just turn on any news channel after 8:30 PM, and the only thing you will hear is either the greatness of Mr. Modi, how poor Pakistan is, or how dumb Mr. Rahul Gandhi is. 

But one thing that is more than enough to counter these negative arguments is that he is a nationalist. He believes in the ideology of "nation first." The kind of development this nation is undergoing is because of the economic environment that this man has created. The struggles of the middle class haven't completely vanished, but they have surely decreased. The middle class still pays more taxes than corporations and wealthy Indians. I am not sure about the eradication of problems for the middle class, but I know for sure that if India hopes for $10 trillion in GDP, or becoming infrastructurally stronger, or becoming the new business hub of Asia, or becoming the manufacturing capital of Asia, the only man who can fulfill these dreams is Mr. Modi and his arsenal of qualified ministers. 

We still need to grow a lot in terms of democracy, justice, the education system, wages and rights equality, poverty, wealth distribution, and many more things. More than right infrastructure, right mentality needs to be cultivated among the youngsters of this nation who will shape the future of this country. Learnings from historical schools of thought like Gurukul should be implemented with mandatory lessons on people like the great Chanakya, late Bharat Ratna Mr. APJ Abdul Kalam, Maharana Pratap, and a few great business leaders this nation has produced. We ourselves should also try and get involved in these things. Remember, it's not just politicians who change a country; we, the citizens, are equally responsible for growth and development. 

This wasn't a coincidence. I purposely wrote this blog when the elections are going on in India because, if you all haven't got it till now, the only person who can uplift India and Indians is Mr. Modi and his fiercely hard-working team of ministers. Remember what Diogenes of Sinope said, "Wise leaders generally have wise counselors because it takes a wise person themselves to distinguish them."