1. Demonetisation
On 8th November 2016, the government announced the demonetization of high value banknotes and issuance of new banknotes in exchange for the old ones. The objective of this act was to catch black money and weed out the fake notes circulating in the economy. The government expected that at least 20-40% of the demonetized cash will not come back to RBI and thus it will end the use of bad money to fund illegal activities and terrorism; however, the amount of money recovered was nowhere near to the expected amount. According to second annual report of RBI after demonetization, 99.3% of high value notes were deposited back to RBI. It was soon realized that the government had no estimates of how much black money was held in the form of cash. On top of that the report made it clear that the new banknotes are not at all counterfeit-proof as RBI detected a significant amount of counterfeit banknotes (newly issued). The act of demonetization had the potential to become a great financial reform, but it ended up becoming an ill thought out and ill planned act and the cost of such act, paid by both the public and the government, went in vain.
2. Make in India
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| Image Source - makeinindia.com |
The Modi government’s Make in India programme aimed to make India a manufacturing hub for both domestic and the international market. It was supposed to induce exported oriented growth of the economy, but the current receipts as a share of GDP continuously declined during the tenure of Modi government. The government’s use of public-private partnership (PPP) model instead of state led development is one of the numerous reasons why this programme failed to do what it intended to. PPP model is good in theory but it has been proven to be a failure in practice for a country like India. This strategy also requires continuous reduction in the cost of production in order to outcompete the others, but a large proportion of production cost consists of wages so this strategy, by its very nature, is in conflict with domestic-demand driven approach. The reasons behind failure of Make in India programme boil down to lack of comprehensible planning for local production of goods and services as well as lack support from other policies.
3. Beti Bachao Beti Padhao
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| Image Source - Ministry of Women and Child Development |
The Beti Bachao Beti Padhao scheme (BBBPS), launched on January 22, 2015, is a flagship programme of the government for the survival and education of girl child and Rs 644 crore was allocated for the scheme. According to reports, the sex ratio declined from 898 in 2014-16 to 896 in 2015-17 and Haryana reported lowest sex ratio (833) among the states. The sex ratio in Haryana was reported to be 834 in 2011 census so the scenario remains more or less same. It was revealed that 20% of the funds allocated for the programme remained unused while 56% of the funds were spent on publicity instead of direct intervention in education and health sectors. Advertisement is considered necessary in case of a social awareness programme such as BBBPS, but government failed to realize that advertisement alone cannot fight a deep rooted social issue. Inept allocation of funds and lack of ground work were the two reasons why this programme failed to make any significant change in mindsets regarding the girl child.
4. Pradhan Mantri Mudra Loan Yojana (PMMY)
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| Image Source - mudra.org.in |
Micro Units Development & Refinance Agency, an initiative which was launched by the Modi government on April 8, 2015, aims to provide loans up to Rs. 10 Lakh to non-farm small businesses and these uncollateralized loans are secured by PMMY. In India, there are 51 million of formal and informal small businesses and they employ about 40 percent of the labor force. The objectives of this scheme were growth of small businesses and employment, but the scheme has failed to reach either of its goals. The average loan under PMMY is Rs 47,249 which is way lower than what is required to start or expand a small business and its effect on job growth is not backed by any data. On top of that Mudra Yojana has many loopholes and the potential to harm the banking sector in the long run, according to many economists. NPA under Mudra Yojana has increased from 9.7 thousand crore in 2017-18 to 14.9 thousand crore in 2018-19.
5. Agriculture Crisis
Modi government promised raise the minimum support prices paid for major crops such as rice and paddy and take other measures to double the income of farmers by 2022, but nothing has changed in the lives of farmers till now even after numerous protests were held by them all over the country. According to the recommendation of Swaminathan Committee, MSP should be 50 percent above the cost of production, however, the government kept MSPs so low that for seven major crops that didn't even cover the production cost. The farmer's return didn't come anywhere close to 50% for any crop at all. Millions of farmers have been suffering from agrarian crisis and thousands, trapped in the cycle of indebtedness, have committed suicide. According to economist Ashok Gulati, doubling the farmer's income would require the agriculture sector to grow somewhere between 13% and 15%, but the current growth rate is less than 3% per year.
After the 2019 Lok Sabha election, it is clear that Modi government remains the preferred choice of the majority despite of its shortcomings. Time will tell whether NDA 2.0 will be able to fulfil its promises or it will fail to solve the major issues once again.
Hi! I am Sahana Chakraborty. I am pursuing M.Sc. in Economics from University of calcutta. I love to travel and experience new cultures. If I could do anything in the world, I would travel the world and write about it. My hobbies include reading, writing, cooking and talking to my cat.
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