Modi Govt @ 8 | The Unfinished Agenda

Modi Govt @ 8 | The Unfinished Agenda

Prime Minister Narendra Modi’s administration has so far delivered the goods on several fronts, but needs to get cracking in the last couple of years of its second term to satisfy the aspirations of the 1.4 billion people who seek a better life. Some are low-hanging fruit. Others will take political capital, but should set a virtuous cycle in motion.

Fiscal consolidation and inflation

The coronavirus disease pandemic and the Russia-Ukraine war have thwarted Modi’s fiscal consolidation drive and frittered away part of the gains made on the inflation front. Moreover, the global macroeconomic environment is expected to remain volatile and uncertain as China challenges US hegemony. In India, which imports 85 percent of its crude oil needs, inflation risks getting out of control even as economic recovery falters.

In this fiscal year and the next, the Modi administration will need to perform a fine balancing act between providing succor to citizens while ensuring that the budget deficit stays within target. Supply-side interventions, like slashing taxes on fuel and imposing barriers on trade, have costs. Prudent expenditure management will guard the exchequer.

Meanwhile, a loss of monetary policy credibility could take the sheen away from India as one of the top investment