Modinomics 2.0

The government looks set to change tack and spend more to boost growth

- Zia Haq

Two-thirds of Prime Minister Narendra Modi’s term is over, and everyone is waiting for Modi­nomics to pay off. With growth falling off a cliff and pessimism taking hold, there are now signs that Modinomics is set to change course. In the offing are a series of measures to handhold the economy. Is there a ‘Modinomics 2.0’ in the making?

When economic agendas stand out, for whatever reasons, they become eponymous. Take, for instance, Abenomics. It’s a label for Japanese Prime Minister Shinzo Abe’s policies to raise his country’s inflation rate, considered too low to sustain growth. Trumponomics refers to Donald Trump’s economic nationalism, marked by threats to cancel the United States’s free-trade pacts. Modinomics—Naren­dra Modi’s economic agenda—on the other hand, is increasingly getting equated with shock therapies, thanks to a bungled demonetisation and a complicated goods and services tax (GST).

After the bitter pills, the Modi government will now look to go easy and consolidate the expected gains, according to emerging signals. It’s not just the slowdown that could necessitate a softening. The political scene is heating up too. Between now and the next Lok Sabha elections in May 2019, assembly elections are due in 12 states.

The bigger battles will be in Gujarat (December 2017), Karnataka (April 2018), Madhya Pradesh, Chhattisgarh and Rajasthan (December 2018). The BJP will face the Congress as the key opponent. In at least three states—Gujarat, MP and Rajasthan—the BJP will watch out for any signs of anti-incumbency.