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A 'common sense' approach to the Economy, is the highlight of the Modi government's economic policies

Author: S Sudhir Kumar
Publication: Myind.net
Date: April 3, 2019
URL:      https://www.myind.net/Home/viewArticle/a-common-sense-approach-to-the-economy-is-the-highlight-of-the-modi-governments-economic-policies

5pm, February 28. At this time, one of the most anticipated events of India used to happen. For nearly 50 years, at this exact time, the Finance Minister of India would present the Annual Financial Statement (a.k.a The Budget) to the Parliament. 11am is when the Parliament starts to function. However, for about 50 years, the Budget was presented at 5pm on February 28th.

After Shri Atal Bihari Vajpayee became the Prime Minister, the Budget timing was changed to 11am on February 28th. Turns out that the 5 pm time was decided so that British Parliamentarians can leisurely watch the Budget at their convenient time of 11:30am local time! It was astonishing how certain things were allowed to carry on in the name of “tradition” by the Congress party.

After Narendra Modi became the Prime Minister, the date of presentation of the Budget was changed to February 1st. Earlier, when the Budget was presented on Feb. 28th, it took up to May before all necessary legislative approvals were in place. Meaning, that we could not spend money till about June of that year. So we lose about 3 months, without expenditure on many things!

If the Budget is presented on Feb.1st and all legislative approvals are obtained before March 31st, then expenditure is possible right from day 1 of the new Financial Year – April 1st. It still beats me as to why no previous government thought about such a basic tenet of a budgeting system!

It is many such common-sense changes and policies that adorn the Financial and Economic policy of the Narendra Modi government.

When the Jan Dhan Yojana was introduced, Congress ecosystem led by P. Chidambaram came out and told us that this just a rehash of their 2012 scheme titled – “Basic Savings Bank Deposit scheme”. Imagine a citizen who doesn’t know English being explained about the awesomeness of a “Basic Savings Bank Deposit Scheme”! Now, P. Chidambaram tells us in 2015 that this 2012 scheme is an extension of “No Frills account” scheme of 2005! Again, who names a scheme as “No Frills”? PC also tells us that most accounts had zero balance and they had opened 24 crore accounts in 9 years. 

Jan Dhan Yojana – this simple and common name instantly connects with people. The implementation of this program was on a different scale altogether. A whopping ~35 crore accounts were opened in just 4 years.  A whopping INR 93,000 crores has come into our banking system. 24 crore accounts in 9 years versus 34 crores in 4 years! It took us so long to come with a common-sense approach to ensure every citizen has a basic bank account.

So what if poor people are depositing their money? The big looters haven’t returned our money. What about them?

Say hello to Insolvency and Bankruptcy code (IBC). I don’t understand the nitty gritty of such complicated schemes. All I know is this – A whopping INR 3,00,000/- crore rupees have come back into our banking system because of this. This was money given away by the UPA government led by economist Dr. MMS. Today, our money has come back into the banking system paving money for many saving schemes.

I don’t care about who is depositing money. I care about saving my money. How did Modi help?

Once our banking system has infusion of money, they can always reduce interest rates! If you had a home or an education loan in 2014, you would have experienced how at one point the interest rates have even come down by ~3%. Even today, the interest rates are 2% lesser than what you used to pay in 2014. Our EMIs have reduced, significantly that too. Should we not count them as our savings?

Let’s assume you do not have any loans to pay off. In order to save on tax, Modi government encouraged you to save more! It increased the exemption limit from 1 lakh to 1.5 lakh. You save more, you pay lesser tax. Should we not count them as our savings?

Even before the revolutionary step of tax exemption for taxable income up to INR 5, 00,000/-, the minimum slab was increased to INR 2, 50,000/- and the standard deduction was increased in INR 40,000/-. So no tax up to INR 2, 90,000/- till 2018. And now no tax up to income of INR 5, 00,000/-. Should we not count them as our savings?

And then came GST. Today, you pay lesser tax on almost every single item as compared to 2014. In some cases, taxes reduced from 21% to 5% too! The Inflation rate has been consistently low all through these 5 years. This means you do not pay exorbitant rates for the stuff you need for your daily life. Infact, this is the first election in which price rise is not even an issue! Add to this the lesser premiums on insurance and lesser cost of medicines, should we not count all of these as our savings?

The common-sense steps like infusing banks with deposits and increasing tax compliance have led to revolutionary steps like reduction of taxes and increase in savings!

Ok fine, I am saving. But I am also hearing a lot of people don’t have jobs because unemployment is increasing. What about them?

Here is where the Modi government has yet again stumped everyone with just some common sense. I would strongly encourage you to watch the video where this lady tears into those who question about unemployment. She makes the wonderful point about how the Modi government has made getting loans very easy, to setup a business. The MUDRA scheme ensured loans up to INR 10 lakhs without any collateral. The Standup India scheme ensured loans from INDR 10 lakhs to INR 1 crore, yet again with any collateral. And then we have Startup India, that has eased many procedures making India more startup friendly.

A whopping total of nearly 17 crore MUDRA loans worth nearly INR 8,50,000/- crores were given out, thus helping all these people to setup their own small-scale businesses. Nearly 70,000 Standup India loans worth nearly INR 15,000 crores have already been given.

Let’s use some more common sense. We have seen record sales of two wheelers, four wheelers and tractors! Basically, this means that more and more jobs get created in these sectors. An estimate shows nearly 1.3 crore jobs have been created in the transport sector alone! Today, we have nearly 150 Mobile manufacturing units as compared to 2 back in 2014; we have overtaken China in manufacturing of railway coaches – does this not indicate an increase in jobs? We have seen huge increase in our world rankings. Today, we have record construction of roads, bridges, houses and airports (don’t believe me, look around for yourself friends) – this only means that large scale jobs are getting generated.

Did you know that the organizations that do surveys on jobs DO NOT include any of these areas in their surveys? How they chose to not use their common-sense is something very amusing!

What about all those who mocked “Chaiwala” saying he doesn’t understand economics?

The biggest testimony of how Modi handled the economy came from P. Chidambaram. When asked where Congress will find the money for their “NYAY” scheme, he said that the increased revenue of Government of India from the increased tax collections will help fund this program! The arrogance of Modi’s critics in trying to shame his past is pathetic. Modi has proven that a common-sense approach is enough to solve many of our economic issues. Modi has proved that encouraging an out-of-the-box thinking will lead to many innovative solutions to help grow our economy by leaps and bounds.
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