MODINOMICS

Macro indicators in good shape, steps to boost household income must for raising economy’s productive capacity

- KG NARENDRANATH

• FULFILLING THE VIKSIT BHARAT@2047 DREAM

A clean slate to work on growth

IN THE LAST decade, the Narendra Modi government has redesigned India's economic structure, almost as much as it has the country's mode of governance and the political landscape.

The change is deeper than what's facilely noticed. The question is whether this is for the long-term good of the country, or a recipe for internal conflicts, and sub-optimal orstunted economic growth for long years ahead.

While governance and policymaking have become more centralised under Modi's watch and directions, resources and profits have shifted from the numerically larger "households" and the informal sector to the dominant formal players and, to some extent, from the states to the Centre. At the same time, large sections of low-income population are made to feel the state's care like never before, with improved access to the basic necessities. The rates of growth of Budget spending on health and education, critical to the emancipation of the poor, however, hasn't risen above trend. Joblessness and a protracted income crisis in the rural sector betray the economy's travails, and the bouts of inflation the decline in its growth capacity.

Digital transactions have proliferated as soon as they are born. However, cash in circulation (CIC) also continued to grow not just in absolute terms, but also as a fraction of the gross domestic product (GDP).

The material hit that was delivered to (an already-faltering) economy via abrupt cancellation of the legal-tender status of 86% of CIC in November 2016 has proven to be without any counterbalancing gains, or closing of the avenues for black money generation.A large part of CIC is now seemingly hoarded.