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Ten years is considered a long time in the Indian economy. Considering both the governments ruling of ten years, both have seen a moderation in growth mostly at the second term of their 5-years terms.

As stated by Elara Capital, policy paralysis was the main drawback of the UPA rule while on the other hand, economical growth was highly affected by the demonetization and GST during the NDA rule. Basically, the cash economy and unorganized sectors were deeply hit due to these.

Tax-GDP ratio

“There has been an increase in compliance as reflected in the ratio of the number of returns filed to the number of persons filing returns. This ratio shows returns filed per person in a year. The higher number indicates past returns that were filed, suggesting an improvement in compliance,” Elara Capital explains. There’s a 200-basis point increase in the tax to GDP ratio along with the higher compliance rate.


Adhesive spending

Capital expenditure saw a huge surge during the first two years of the Modi government which lost its momentum sometime later. From less than Rs 3 trillion in FY14 under the rule of the UPA government, the internal and extra-budgetary resources raised significantly to Rs 6 trillion in FY20 under the NDA dispensation. This is the result of the Modi government’s continuous pushing of the burden of CAPEX on extra-budgetary resources.

Dividend and disinvestment

According to the Elara Capital report, “Reliance on unconventional and off-market disinvestments rose multifold under the NDA. Receipts worth Rs 7,472 crore were in the form of buybacks and cross-holdings of central public sector enterprises under the entire regime of UPA-2 as against Rs 65,698 crore under the NDA till date, suggesting a greater reliance on unconventional measures for raising revenue,”


Inflation management

The NDA government has seen record-high food production for Kharif along with the rabi corps. This led to a significant decline in food prices during the 2017-18 period onwards, especially for pulses and derived food. On the contrary, UPA had to face the worst drought in the history of India’s economy in 2009 and the Southwest Monsoon was recorded at 22% which was below its long-period average.

“While UPA dealt with shortages, NDA had to deal with excesses. This primarily determined the difference in approach of the two regimes towards food policy management,” Elara Capital said.

Financial inclusion picks up

According to the analysts, demonetization and direct benefit transfer have ensured a leg-up to bank penetration in India. But practically, the initial boost in the number of accounts and deposits have met a standstill. There are about 48% inactive accounts in India as per the World Bank reports which are almost double the average 25% for the developing countries.


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