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May 22, 2017

Mammoth moves: 3 years of the Modi government

On May 26, 2017, the Narendra Modi-led National Democratic Alliance (NDA) will complete the third and most eventful year so far of its five-year term. The good part is, this hasn’t been a two-steps-forward, one-step-back kind of government. The mammoth is on the move, as it were, warts and all. But for it to charge ahead, relentless implementation would be crucial because most of the repairs and reforms remain work in progress.

The Modi Government
had avoided populism
and focused on steps to
raise India's potential
growth rate

Overall, we maintain that the steps taken by the Modi government do not create an immediate and strong upside to growth, but they do improve India’s ability to achieve faster and, importantly, sustainable growth over the medium term.

In our report card last year, we had pointed out that while the Modi government had avoided populism and focussed on steps to raise India’s potential growth rate, there was a risk that it could change course when the political cycle kicked in. So far, there is no evidence of that. Which also means the gains made on the fiscal and monetary fronts over the past three years are unlikely to be reversed.