By Dr. Pothireddy Surendranath Reddy
Introduction — a transformational, contested decade
Since Narendra Modi became Prime Minister in 2014, India has pursued a distinct policy mix emphasising formalisation of the economy, large-scale infrastructure, digitalisation, investment promotion, and supply-side reforms. The Modi era is best understood not as a single policy but as a constellation: tax and regulatory overhaul (GST, IBC), sudden macroeconomic shock therapy (demonetisation), aggressive digital and payments architecture (Digital India, UPI), sectoral industrial incentives (Make in India, PLI), and big-ticket social and infrastructure programmes (Ayushman Bharat, housing, roads). This essay examines those major reforms, evaluates evidence on their economic impact, and weighs the gains against structural risks and distributional consequences. For empirical context I draw on official releases, central-bank and multilateral assessments, policy papers and independent studies. IMF+1
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The Goods and Services Tax (GST), implemented in 2017, was one of the most ambitious federal tax reforms in India’s history. Its intent was to replace a fragmented indirect-tax system with a unified consumption tax to reduce cascading taxes, simplify compliance and widen the tax net. Over time GST collections have risen substantially, and the revenue story — especially in recent years — indicates deeper formalisation and better compliance. Record gross GST receipts reported in 2024–25 are frequently highlighted as evidence that the system is maturing and contributing to state and central receipts. Press Information Bureau+1
Impact: GST helped make large chunks of the economy more traceable (input-output chains became visible), aided formal invoicing and probably contributed to higher tax compliance. However, during the transitional years GST created compliance burdens for small firms and multiple rate disputes; administrative simplifications and grievance redressal remain ongoing tasks. tijer.org
On 8 November 2016, the government demonetised high-value currency notes. The policy’s stated goals were curbing black money, countering counterfeiting and promoting digital payments. The short-term effects included a severe liquidity squeeze, disruption to informal sectors and agricultural cash cycles, and reported job impacts in cash-intensive activities. Several studies, however, have suggested the policy did add to formalisation — by accelerating digitisation and increasing tax filings and electronic records — though the long-term macro benefits remain debated. A number of academic and government-commissioned reviews found a mixed picture: clear short-term costs to output and livelihoods, with some gains to tax compliance and digitisation later. isec.ac.in+1
Impact: Demonetisation’s structural legacy appears to be partial: it accelerated the move to digital payments and may have pushed informal firms to register and file taxes, but the immediate welfare cost to the most cash-dependent workers was acute and well documented. isec.ac.in
A defining success of the Modi period has been the construction and extension of India’s public-good digital infrastructure: Aadhaar (biometric ID), the Bharat Bill-Pay system, and, crucially, the Unified Payments Interface (UPI). UPI has revolutionised retail payments and financial inclusion by making instant, low-cost digital transactions ubiquitous across urban and rural India. Transaction volumes and values have grown exponentially, and governments and businesses now base delivery and payments on this digital backbone. UPI and related steps have lowered transaction costs, increased transparency and created a platform for fintech entrepreneurship. Press Information Bureau+1
Impact: The UPI-Aadhaar ecosystem reduced frictions in payments and welfare transfers, increasing the effectiveness of subsidies and enabling a rapid rise in digital commerce. However, regulatory questions (market concentration, data governance, and digital exclusion for some marginal groups) remain active policy issues. Reuters+1
The Insolvency and Bankruptcy Code (IBC), enacted in 2016 and operationalised under Modi’s tenure, aimed to speed resolution of stressed corporate assets, improve creditor recovery, and discipline borrowers. International observers and the World Bank’s Doing Business rankings praised the IBC for strengthening insolvency resolution mechanisms. The IBC contributed to higher recovery rates for lenders and a faster resolution pipeline, which in turn helped reduce the overhang of non-performing assets (NPAs) in the banking system. Insolvency and Bankruptcy Board of India+1
Impact: IBC’s fast-tracked processes discouraged strategic default and improved the functioning of credit markets. Yet legal and implementation challenges, such as litigation and valuation complexities, have slowed some resolutions. Overall, the reform strengthened financial-sector health and investor confidence. Insolvency and Bankruptcy Board of India
Modi’s economic strategy shifted from purely liberalisation rhetoric to active industrial policy. Schemes like Make in India (launched 2014) and the Production-Linked Incentive (PLI) programmes (from 2020) offered targeted incentives to attract manufacturing — especially electronics, pharma, and value-added exports. The government also retooled investment promotion institutions and ran large investment summits and SIPB approvals. Official tallies and department reports point to substantial interest and rising FDI inflows in the Modi years; the government highlights growing commitments in strategic sectors under PLI. Press Information Bureau+1
Impact: Early evidence shows green shoots: electronics manufacturing and certain assembly lines have expanded, and targeted incentives attracted anchor firms. But the final test is conversion — MoUs into operational plants — and the deeper industrialisation that creates broad-based, quality manufacturing jobs. The PLI model appears promising for capital-intensive segments but must be complemented by skills, supplier development and infrastructure. India Briefing+1
The Modi government expanded or launched large delivery-mode social programmes such as Ayushman Bharat (health insurance), the Pradhan Mantri Awas Yojana (housing), and direct-benefit transfer channels. By linking these programmes to Aadhaar and bank channels, the government emphasised transparency and leak reduction. Evidence suggests improved coverage in certain target dimensions (e.g., hospitalisation coverage under PMJAY) and a large expansion in formal housing stock through subsidies and incentives. NITI Aayog
Impact: These schemes have significant welfare potential but require robust local implementation and universal access to avoid exclusion errors. Health-infrastructure gaps and public-good aspects of primary care still need sustained investment. NITI Aayog
Aggregate outcomes under Modi are mixed but broadly positive on growth resilience. Multilateral assessments (IMF Article IV reviews) in recent years highlight India’s robust growth trajectory — with real GDP growth forecasts that outpace many peers — alongside controlled inflation and a contained current-account deficit. Public finances have been managed with a mix of higher capital expenditure and fiscal consolidation steps, though debt and contingent liabilities remain issues for medium-term fiscal space. Exports and service receipts — especially IT services — have been pillars of external resilience. IMF+1
Impact: India’s macroeconomic stability has improved relative to several earlier periods, supporting investment. Nonetheless, the challenge is sustaining fiscal prudence while financing large infrastructure and subsidy commitments. IMF
No major policy programme is without critics. Observers point to these recurring concerns:
Short-term pain vs long-term gain: Policies like demonetisation imposed heavy short-term costs on informal workers that have been unevenly compensated by later benefits. India Budget
MoU vs. realisation problem: Numerous large MoUs and investment promises need conversion — monitoring and accountability mechanisms have to ensure they materialise into factories and sustained jobs. India Briefing
Concentration risks: Rapid digitalisation (UPI/FinTech) raises questions about market concentration, competitive fairness and data governance. Reuters
Social inclusion: While programme coverage expanded, ensuring that marginal and remote groups benefit equally is an ongoing governance task. citeturn0search7
Narendra Modi’s policy mix has clear strengths: bold structural reforms (GST, IBC), construction of digital public goods (Aadhaar, UPI), a focused industrial push (PLI), and large visible infrastructure and welfare programmes. These moves increased formalisation, strengthened the banking/credit ecosystem, and built a globally competitive digital payments architecture. Multilateral and official data point to sustained growth, stronger FDI flows and resilient macro fundamentals. IMF+2Press Information Bureau+2
However, the economic dividends are conditional: they depend crucially on converting announcements into on-ground investments, managing fiscal sustainability while financing infrastructure and welfare, closing skill and supply-chain gaps for manufacturing, and addressing legitimate distributional and implementation challenges. Where Modi’s governments succeeded most was in shaping national narratives, reducing certain frictions (payments, insolvency) and using active industrial incentives. The remaining task is execution at scale and inclusion in outcomes. Press Information Bureau+1
IMF — India: 2024 Article IV Consultation (Press Release & Staff Report). IMF
Press Information Bureau (Government of India) — GST collections, UPI bulletins and PLI/industry updates. Press Information Bureau+2Press Information Bureau+2
Insolvency and Bankruptcy Board (IBBI) — explanatory notes on IBC implementation and recoveries. Insolvency and Bankruptcy Board of India
Independent studies on demonetisation and formalisation (ISEC working papers, government economic surveys). isec.ac.in+1
DPIIT / Departmental reports on FDI trends and industrial policy. Press Information Bureau+1