Economic policy of the Narendra Modi government

Economy

In his first budget, Finance Minister Arun Jaitley promised to gradually reduce the budgetary deficit from 4.1% to 3% over two years and to divest from shares in public banks.

Over Modi's first year in office, the Indian GDP grew at a rate of 7.5%. However, the first eight years of Modi's premiership, India's GDP grew at an average rate of 5.5% per cent compared to the rate of 7.03 per cent under the previous government. In recent years, independent economists and financial institutions have accused the government of manipulating various economic data, especially GDP growth rate.

In July 2014, Modi refused to sign a trade agreement that would permit the World Trade Organization to implement a deal agreed in Bali, citing that agreement will lead to "lack of protection to Indian farmers and the needs of food security" and "Lack of bargaining power". The addition to Indian airports grew by 23 percent in 2016 while the airfares dropped by over 25 percent.

The level of income inequality increased drastically, while an internal government report said that in 2017, unemployment had increased to its highest level in 45 years.

The loss of jobs was attributed to the 2016 demonetisation, and to the effects of the Goods and Service Tax. The last year of Modi's first term didn't see much economic development and focused on the policies of defence and on the basic formula of Hindutva.

His government focused on pension facilities for old-age group people and depressed sections of society. The economic growth rate in 2018-19 was recorded to be 6.1%, which was lower than the average rate of the first four years of premiership.

The fall in the growth rate was again attributed to the 2016 demonetisation and to the effects of the GST on the economy. In 2025, Modi's government announced reforms to the country's goods and services tax (GST).

Make in India

In September 2014, Modi introduced the Make in India initiative to encourage foreign companies to manufacture products in India, with the goal of turning India into a global manufacturing hub. Supporters of economic liberalisation supported the initiative, while critics argued it would allow foreign corporations to capture a greater share of the Indian market. "Make in India" had three stated objectives:

• to increase the manufacturing sector's growth rate to 12-14% per annum
• to create 100 million additional manufacturing jobs in the economy by 2022
• to ensure that the manufacturing sector's contribution to GDP is increased to 25% by 2022 (later revised to 2025).

Make in India has been unsuccessful at achieving its stated targets. Under this programme, the share of manufacturing in GDP was projected to reach 25% by 2022. However, the GDP share of manufacturing has actually fallen from 16.7% in 2013–2014 to 15.9% in 2023–2024.