Since assuming power in 2014, the Narendra Modi-led government has been a polarizing force in Indian politics, with its reform agenda often hailed as transformative by supporters and criticized as inadequate or disruptive by detractors.
Over the past decade, the government has rolled out several high-profile reforms aimed at reshaping India’s economy, governance, and social fabric. However, a critical examination reveals a mixed track record, with notable successes tempered by significant shortcomings, uneven implementation, and unintended consequences. This article evaluates the Modi government’s reforms based on their tangible outcomes, focusing on economic, social, and governance initiatives.
One of the Modi government’s flagship economic reforms is the Goods and Services Tax (GST), introduced in 2017. Billed as a game-changer, GST aimed to unify India’s fragmented tax system, replacing a web of central and state levies with a single tax structure. The reform has indeed expanded the tax base, with GST collections rising from ₹97,555 crore in FY19 to ₹18.10 lakh crore in FY23, reflecting a growth rate of 12.3% compared to the nominal GDP growth of 9.8% over the same period. However, the rollout was marred by complexity, particularly for small businesses, which struggled with compliance burdens due to frequent changes in tax slabs and filing requirements.
Critics argue that the initial implementation was poorly planned, causing disruptions in supply chains and economic activity, particularly in the informal sector, which employs a significant portion of India’s workforce. Another cornerstone of the Modi government’s economic agenda is the Make in India initiative, launched in 2014 to position India as a global manufacturing hub. The programme aimed to boost the manufacturing sector’s GDP contribution to 25% by 2022 and create 100 million jobs. Despite the fanfare, the results have been underwhelming.
The manufacturing sector’s share in GDP has stagnated at around 15.9% in 2023-24, down from 16.7% in 2013-14. Job creation has also fallen short, with manufacturing employment declining by half over the past five years, according to the Centre for Economic Data and Analysis. While the Production-Linked Incentive (PLI) scheme, introduced in 2020, has attracted investments in sectors like electronics, the broader goal of transforming India into a manufacturing powerhouse remains elusive, hampered by structural issues like rigid labour laws and inadequate infrastructure.
The Insolvency and Bankruptcy Code (IBC) of 2016 is often cited as a success, addressing the long-standing issue of non-performing assets in India’s banking sector. Before the IBC, bankruptcy proceedings could drag on for decades, crippling banks’ ability to recover loans. The IBC introduced a time-bound resolution process, enabling banks to recover significant portions of bad debts. However, challenges persist, including delays in resolution processes and limited capacity in insolvency courts.
The banking sector has also benefited from the government’s 4R strategy (Recognition, Resolution, Recapitalisation, and Reform), with over ₹3 lakh crore infused into public sector banks since 2015. Yet, the sector’s reliance on government support and the slow pace of privatization raise questions about long-term sustainability. On the social front, the Modi government’s initiatives like the Pradhan Mantri Jan Dhan Yojana and the JAM (Jan Dhan-Aadhaar-Mobile) trinity have driven financial inclusion.
By 2018, nearly 310 million bank accounts were opened, bringing unbanked populations into the formal financial system. Direct Benefit Transfers (DBT) have reduced leakages in welfare schemes, saving an estimated $27 billion by 2023. The Ujjwala scheme, providing free LPG connections to rural households, increased LPG access by 24% between 2014 and 2019. However, critics point out that reductions in social welfare spending—from 14.6% of GDP under the previous government to 12.6% in Modi’s first year—have constrained the impact of these schemes.
Healthcare funding, in particular, remains inadequate, with public health expenditure among the lowest globally, and the Ayushman Bharat scheme underutilized during the COVID-19 crisis. The demonetization of 2016, one of the government’s boldest moves, aimed to curb black money and promote digital transactions. However, its execution was chaotic, causing severe cash shortages that disrupted small businesses and the informal economy.
An internal government report noted a spike in unemployment to a 45-year high in 2017, partly attributed to demonetization and GST disruptions. The long-term benefits, such as increased digital payments, are undeniable, but the economic and social costs were significant, with limited evidence of a substantial reduction in black money. Labour reforms, aimed at simplifying India’s complex labour laws, have been contentious.
While supported by institutions like the World Bank for promoting flexibility, they faced fierce opposition from trade unions, culminating in a nationwide strike in 2015 that cost the economy $3.7 billion. Critics argue that these reforms prioritize corporate interests over workers’ rights, potentially exacerbating income inequality, which has reached historic highs under Modi’s tenure. Governance reforms, such as the abolition of the Planning Commission and the creation of NITI Aayog, reflect a shift towards centralized decision-making.
While NITI Aayog aims to foster cooperative federalism, its reduced role in fund allocation has drawn criticism for limiting states’ fiscal autonomy. The government’s push for ease of doing business has yielded results, with India’s World Bank ranking improving from 130th in 2016 to 63rd in 2020. However, bureaucratic red tape and regulatory inconsistencies continue to hinder business operations. The Modi government’s reform agenda is ambitious, with successes in financial inclusion, banking reforms, and tax unification.
However, the pace of reforms has slowed in its second term, with only six of 30 tracked reforms completed compared to nine in the first term, according to the CSIS India Reforms Scorecard. Structural challenges, such as unemployment, stagnant manufacturing, and rising inequality, remain unaddressed. The government’s reliance on executive orders and centralized control has also raised concerns about democratic backsliding, with sedition cases against critics rising by 28% since 2014.
In conclusion, while the Modi government has laid a foundation for economic and social transformation, its reforms have often been hampered by poor execution, political resistance, and a failure to address deep-rooted structural issues. The narrative of a resurgent India is compelling, but the reality is a nation still grappling with the complexities of translating bold visions into sustainable outcomes.