PM Modi 3.0: Can the government deliver on jobs and private investment?

India Today

a day ago

As the Prime Minister Narendra Modi-led government has completed 11 years in power, a key question looms over its economic legacy - has the Indian economy truly performed well under its watch? While supporters point to improved macroeconomic stability, critics often highlight the lack of progress in job creation and private investment. An analysis of key economic data provides a mixed but telling picture of the country's journey so far and the road ahead.advertisementTwo of the most prominent indicators used to evaluate a government's economic record are GDP growth and inflation. During the UPA era (2004–2014), GDP growth averaged 6.8 percent. Under the Modi government, which took office in 2014, the average stands slightly lower at 6.2 percent. However, if the outlier years of the COVID-19 slump in 2020–21 and the subsequent rebound in 2021–22 are excluded, the adjusted average under Modi rises to 7.1 percent.Inflation, another major talking point - especially under the UPA government - has been a mixed story. During the UPA years, inflation averaged 5 percent. Under Modi, the number has been higher at 8.1 percent, although this increase is partly attributable to global volatility and changes in inflation benchmarks. Despite this, the Modi administration has received praise for maintaining relative stability in food prices, thanks to improved supply chains and quicker policy responses.advertisement
One factor that played a quiet but crucial role in controlling inflation has been the global crude oil price. When the Modi government came to power in June 2014, the Indian crude oil basket was priced at USD 107 per barrel. By June 2025, the price had dropped to US 67.38 per barrel. Despite the depreciation of the rupee over the years, the rupee cost per barrel is now 11 percent lower than it was 11 years ago. This favourable trend has significantly helped in managing inflation levels.According to leading economists, several macroeconomic indicators suggest that India's economic fundamentals remain strong. Inflation is within the Reserve Bank of India's comfort zone. Corporate and banking sector balance sheets are healthier compared to a decade ago. Fiscal data is transparent, the current account deficit is within manageable limits, and public debt remains low. India is expected to grow at 6.5 percent in FY26, although global uncertainty continues to pose risks.However, two persistent concerns threaten to overshadow these achievements - sluggish private sector investment and a lack of formal job creation. These issues gained significant traction in recent state elections and were a major talking point during the 2024 Lok Sabha polls. With rising automation, AI, and tech adoption, employment opportunities - particularly in the formal sector - are becoming scarcer. The government is increasingly looking to the private sector to generate jobs, but private players have indicated they need more policy support.advertisementPart of the bottleneck lies in unfinished reforms. Two major reform areas - land acquisition and labor codes - remain mired in political resistance. The Modi government's initial attempt at land reform in 2014 was rolled back after widespread protests. Although labor codes have been passed by Parliament, their implementation remains stalled as several states have delayed notification.As India moves to sign more free trade agreements, these structural reforms become more pressing to ensure competitiveness and sustained economic growth.The roadblocks don't end there. Plans for privatization and asset monetisation - once touted as critical to funding infrastructure and reducing the fiscal burden - have been put on hold. With coalition politics making a comeback in Modi's third term, such strategic initiatives may now require more political negotiation. However, with a fresh mandate and regained political capital, the government may accelerate action in the coming months.Globally, challenges continue to emerge. The World Bank recently revised India's GDP forecast for FY25 down to 6.3 percent from an earlier estimate of 6.7 percent, attributing the cut to weaker global demand and a slowdown in investment growth. Nevertheless, India is still expected to be the fastest-growing major economy in the world. The World Bank also highlighted positive trends such as contained inflation, improving fiscal indicators, and a slow but steady decline in public debt. It recommended lowering tariffs and strengthening fiscal discipline to stimulate global economic momentum.As Modi 3.0 begins, the economic path forward is lined with both opportunities and challenges. While India's macroeconomic foundation appears resilient, the missing piece - jobs and private investment - will be the key to sustaining long-term growth and addressing rising voter expectations.Must Watch