Major Economic Changes Since the Previous Elections: The Good, The Bad

In 2023, during his Independence Day speech, Prime Minister Narendra Modi set a goal for India to become a developed economy by 2047. He highlighted three key strengths: India’s large and youthful population (demography), its democratic system, and its cultural diversity. This vision would have seemed unrealistic a decade ago when India was struggling economically. Notably, in 2013, India was among the "Fragile Five" economies. It was highly vulnerable due to its dependence on foreign capital and large current account deficits.

However, by 2023, India had transformed, and several economic changes had occurred since the last elections. Now, international investors and businesses are focusing on India, especially as a “China plus one” destination. Also, the government has achieved significant milestones through poverty reduction and expansion of infrastructure like airports and railways. For more clarity, let’s look at the five major economic changes since the last elections.

• India's GDP grew at an average of 5.6% between 2014 and 2022.
• To become a developing economy by 2047, India needs to accelerate its GDP growth and grow faster than 6-7%.
• Extreme poverty dropped from 18.7% in 2015 to 12% by 2021. This happened due to government welfare programs like the free food grain scheme.
• A major economic change since the last elections is that India has significantly increased spending on roads and railways. It has added over 10,000 km of roads annually since 2018.

During Narendra Modi’s two terms as Prime Minister, India has consistently been one of the fastest-growing large economies. From 2014 to 2022, India’s GDP grew at an average compound annual growth rate (CAGR) of 5.6%. This figure is significantly higher than the 3.8% average growth rate of 14 other major developing economies during the same period. This shows India’s economic strength compared to other countries in similar stages of development.

However, economists suggest that for India to become a developed nation by 2047, the economy needs to grow faster than the current 6-7% rate. It is important to create enough jobs for the increasing number of young people entering the workforce.

One of the most significant economic changes since the last elections is that India has seen a significant reduction in extreme poverty. The percentage of the population living below the international poverty line ($2.15 a day) dropped from 18.7% in 2015 to 12% by 2021. Both urban and rural areas benefited from this decline. Several economists suggest that this fall was due to social welfare programs helping the poorest citizens.

The government’s large-scale social welfare schemes, such as the “free food grain program” were a success. This scheme was extended for five years after benefiting over 813 million people during the pandemic.

Moreover, the government has also used technology smartly to ensure welfare reaches the right people. For example, over 500 million new bank accounts were opened for low-income citizens. This enabled direct transfers to beneficiaries and reduced corruption.

Since the last elections, India's middle class has rapidly expanded. Millions of people have improved their financial status. According to a household survey conducted by People Research on India's Consumer Economy, the middle class (families earning between Rs. 5,00,000 and Rs. 30,00,000 annually) has seen substantial growth.

The number of wealthy individuals has tripled, from 30 million to 90 million. Meanwhile, the middle class has grown from 300 million to 520 million people. This is one of the most important economic changes since the last elections, as it shows the strong impact of economic growth on improving living standards.

The Modi government has focused on improving public health and hygiene, particularly through initiatives like a nationwide campaign to build public toilets. This effort improved sanitation and living conditions across the country.

Additionally, India's infant mortality rate has declined over time. By 2020, India’s infant mortality rate had fallen to a level lower than that of South Africa. These steps show that the government is committed to enhancing basic health and hygiene standards for the population.

One of the major economic changes since the last elections is that India has significantly increased its spending on infrastructure, particularly in roads and railways. In the interim budget 2024-25, 2024, India allocated an impressive Rs. 11.1 lakh crore for infrastructure projects. This marked a substantial increase of 11% over the previous year’s budget.

Data from CMIE also shows a construction boom since the last elections. As per estimates, India added over 10,000 kilometres of roads annually since 2018. This rapid expansion of road and rail networks has been one of the government’s most notable achievements.

It has not only improved transportation but also boosted the economy by creating jobs. Also, infrastructure projects have facilitated trade and movement across regions.

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