Manmohan vs Modi: A Decade of Economic Impact

The economic policies of Dr. Manmohan Singh and Narendra Modi have significantly shaped India’s financial landscape over the past two decades. This analysis provides a detailed comparison of their tenures, focusing on key economic indicators. Using infographics and data visuals, we contrast the performance of the UPA (United Progressive Alliance) under Manmohan Singh and the NDA (National Democratic Alliance) under Narendra Modi. The comparison covers GDP growth, retail inflation, tax-to-GDP ratio, stock market returns, trade deficit, government debt, and education expenditure.

The Big Thing. GDP Growth

During Dr. Manmohan Singh’s tenure from 2004 to 2014, the Indian economy experienced an average GDP growth rate of approximately 7.7% year-on-year (YOY). This period saw robust economic expansion, driven by liberalization policies, increased foreign investments, and a booming services sector.

Under Narendra Modi’s leadership from 2014 onwards, the average GDP growth rate has been around 6.8% YOY. While the economy initially experienced strong growth, factors like demonetization, the implementation of GST, and the COVID-19 pandemic have affected overall performance.

Manmohan Singh’s tenure saw higher average GDP growth compared to Modi’s period. However, Modi’s government has focused on structural reforms intended to create a more resilient economy in the long term.

Controlling Retail Inflation

Retail inflation, measured by the Consumer Price Index (CPI), averaged around 7.5% annually during the UPA years. High food and fuel prices were significant contributors to inflationary pressures during this period.

Under Modi, retail inflation has averaged around 4.8% annually. The government’s focus on inflation targeting through the Reserve Bank of India and measures to improve food supply chains has helped keep inflation in check.

Modi’s administration has been more successful in controlling retail inflation compared to the UPA period, resulting in lower average annual inflation rates.

Collecting Taxes Effectively: Tax to GDP Ratio

The tax-to-GDP ratio is a crucial metric for several reasons. It indicates the government’s capacity to generate revenue from the economy. Higher ratios suggest that the government can raise more funds to finance public services and infrastructure.

During the UPA tenure, the tax-to-GDP ratio averaged around 10.4%. Efforts were made to widen the tax base, but challenges in enforcement and compliance persisted.

Under Modi, the average tax-to-GDP ratio has improved to approximately 11.5%. The introduction of the Goods and Services Tax (GST) aimed to simplify the tax structure and enhance compliance, contributing to higher tax revenues.

The NDA has seen a higher average tax-to-GDP ratio, reflecting better tax compliance and a broader tax base due to GST implementation.

Bull Run. Returns from Stock Market Returns

The UPA era witnessed an average annual stock market return of around 15%. The period was marked by significant market rallies driven by economic growth and foreign investment inflows.

During Modi’s tenure, the stock market has delivered an average annual return of approximately 11%. Despite market volatility and economic disruptions, long-term reforms have supported market confidence.

While both tenures saw positive stock market returns, the UPA period experienced higher average annual returns compared to the NDA period.

Deficits and Debt. Economic

The UPA years saw an average annual trade deficit of around USD 100 billion. High import bills, especially for oil and gold, contributed significantly to the trade deficit.

Under Modi, the average annual trade deficit has been about USD 70 billion. Initiatives like Make in India and measures to curb non-essential imports have helped reduce the trade deficit.

The NDA has managed to lower the average annual trade deficit compared to the UPA period, reflecting better management of import bills and a push towards domestic manufacturing.

During the UPA tenure, government debt averaged around 68% of GDP. Increased public spending and fiscal stimulus measures contributed to higher debt levels.

Under Modi, government debt has averaged around 70% of GDP. While the government has focused on fiscal consolidation, spending on infrastructure and social programs has kept debt levels high.

Government debt as a percentage of GDP has remained relatively stable between the two periods, with a slight increase under the NDA due to higher spending on developmental programs.

Education Expenditure (% of GDP Avg)

Top education spenders in Asia, measured by GDP percentage, include South Korea (4-5%), Japan, Singapore (3-4%), Malaysia (4-5%), Thailand (around 4%), and Hong Kong (3-4%). These countries prioritize education, investing heavily in quality, technology, and skills development.

Education expenditure averaged around 3.8% of GDP during the UPA years. Significant investments were made in expanding access to education and improving infrastructure.

Under Modi, education expenditure has averaged around 3.5% of GDP. The focus has been on improving the quality of education, skill development, and digital learning initiatives.

Both administrations have allocated similar proportions of GDP to education, with the UPA slightly ahead in terms of average expenditure. However, the NDA has emphasized quality and skill development more prominently.

Comparing the economic impacts of Manmohan Singh and Narendra Modi’s tenures reveals distinct approaches and outcomes. The UPA period saw higher GDP growth and stock market returns, but also higher inflation and trade deficits. The NDA has managed better inflation control, an improved tax-to-GDP ratio, and a reduced trade deficit, reflecting a focus on structural reforms and fiscal discipline. Using infographics and data visuals, this comparison provides a clear understanding of each administration’s economic performance, helping readers grasp the broader impacts of their policies on India’s economy.