|
Overview:
As Prime Minister Narendra Modi marks 11 years in office, this analysis reviews India’s macroeconomic performance, comparing it to the 2004–2014 period. It highlights major achievements, lingering issues of inclusivity, and policy directions going forward — particularly in agriculture and subsidy reforms.
Macroeconomic Performance:
GDP Growth – Nominal and PPP Terms:
India’s nominal GDP grew significantly — from $709 billion in 2004 to $2.04 trillion in 2014. It is projected to reach $4.19 trillion by 2025, putting India on track to surpass Germany and become the world’s fourth-largest economy.
In terms of purchasing power parity (PPP), GDP expanded from $2.75 trillion (2004) to $6.45 trillion (2014), and is expected to touch $17.65 trillion in 2025 — ranking third globally, behind only China and the United States.
Per Capita Income (PPP):
India’s PPP-based per capita income grew from $2,424 in 2004 to $4,936 in 2014 and is projected to reach $12,132 by 2025.
The country’s global ranking improved from 181st in 2004 to 149th in 2025. However, it still lags behind most G20 countries, including China, Sri Lanka, and Bhutan — though it has moved ahead of Pakistan and Bangladesh.
Inequality and Inclusion:
India’s Gini coefficient, a key measure of income inequality (0 = perfect equality; 1 = perfect inequality), has shown limited fluctuation. It moved from 0.34 in 2004 to 0.35 in 2014 and slightly declined to 0.33 by 2021, indicating relatively stable — though moderate — inequality levels.
Agricultural Growth and Social Welfare:
Agriculture:
Despite two consecutive drought years (2014–15 and 2015–16), agricultural GDP grew at an average annual rate of 4% from FY15 to FY25, surpassing the 3.5% rate recorded during FY05–FY14, which included a severe drought in 2009–10.
Welfare Programs:
- PM-KISAN: Direct income transfers to farmers
- Public Distribution System: Nearly free monthly grain rations (5 kg/person) to 800 million citizens
- Subsidized rural housing
- Fertilizer price controls (especially on urea)
Poverty Reduction:
These interventions led to a sharp decline in extreme poverty.
- At the $3/day (PPP, 2021) threshold, the poverty headcount dropped from 27.1% in 2011 to 5.3% in 2022 — a 80% reduction.
- At the $4.20/day threshold (for lower-middle-income countries), poverty fell from 57.7% to 23.9% in the same period — a 60% drop.
Towards Smarter Subsidies:
Food Subsidy Reform:
The FY26 food subsidy budget stands at ₹2.03 lakh crore, providing nearly free grains despite declining poverty.
A shift to digital food coupons — valued around ₹700/month for the poorest 15% — would allow beneficiaries to purchase nutritious food (pulses, milk, eggs) from approved outlets. This would improve diet diversity, plug system inefficiencies, and support a broader food economy.
Fertilizer Subsidy Reform:
With ₹1.56 lakh crore earmarked for FY26, fertilizer subsidies also require restructuring.
By distributing fertilizer coupons and deregulating prices, farmers could choose between chemical, organic, or natural fertilizers. This would encourage more balanced nutrient use (N, P, K), reduce wastage, and foster innovation.
Implementation Challenges:
- Identifying tenant farmers
- Integrating data from multiple sources
- Building trust through early and transparent communication — a politically sensitive but necessary precursor to reform
|
Latest News
EDITORIALS & ARTICLES
General Studies