By Krishna Jha
Official celebrations are on as Narendra Modi government completes its twelve years in office. Among the achievements, we have indications of constant decay in our democratic ethos. Economy faces doom and has reached a dire state during this period. Practically no economy in the world today is as vulnerable to growth, inflation, investment, exports and fiscal deficit shocks as India. And the backsliding is unprecedented.
In fact, not a single macro-economic fundamental looks healthy. On every macroeconomic indicator, India is either performing extremely badly or is at a huge risk of gross under-performance. The GDP growth is collapsing. The NSO’s second advance estimate for 2025-26 has placed “real” growth at 7.6 per cent, but this figure is misleading. It assumes just 1 percent inflation (with nominal GDP at 8.6 percent). This growth is also after the government pushed over a Rs 12 trillion over reported GDP to 2023-24. In current US dollar, IMF’s World Economic Outlook shows growth at only 4.2 percent. With inflation surging and the rupee depreciating sharply, the real growth in 2026-27 is likely to fall to 5-5.5 percent, while IMF’s dollar-based growth could be as low as 2-4 percent.
Inflation is rising fast. Petrol and diesel prices have already been hiked significantly. The increase in these prices is expected to continue. Secondary effects from fuel, gas, and aviation prices are driving up industrial and agricultural costs, pushing the Wholesale Price Index inflation above 8 percent in April this year. With interest rates and fiscal deficits climbing, broad based inflation is inevitable.
During the past twelve years of Modi rule, Indian rupee has become Asia’s worst-performing currency. It is likely to touch 100 rupee to a dollar soon. So dire is the situation that India’s 700 billion dollar forex reserves inspire little confidence, given soaring debt-servicing obligations (both government and private).
Investment costs are rising, exports remain stagnant, and the current account deficit is rising menacingly. The investments, both domestic and foreign, are on the backslide. The gross FDI inflows are stagnant. With sharp increase in repatriation, FDI inflows have become meagre. It was less than 27 billion dollar in 2025. Indian industrialists are racing to invest abroad making the outward FDI jump up. Consequently, the net FDI is virtually zero or negative. There is very little investment opportunity in India in the new-age industries in the absence of technology leadership in areas like solar, electric vehicle, semiconductor chips, computer servers, AI agents, etc. Consequently, the domestic investment is also negligible.
According to Global Investment Report, India slipped to 15thplace in global FDI rankings in 2024. It is likely to have fallen further since then. While global FDI is declining, India’s performance is particularly weak. Domestic private investment continues to shrink quarter after quarter, and government capital expenditure, which drives private investments, is now stalling. Productivity enhancement investment is virtually absent.
Overall, India’s investment growth engine is dying. Merchandise exports have stagnated since 2013-2014, while imports have surged. With the weak exports, the trade deficit with China has crossed 100 billion dollar annually. And then there is the US threat to wipe out India’s export surplus. West Asian exports are at risk following the US and Israel war on Iran. India’s net export growth engine is stuck. The government and the RBI are doing nothing to protect the rupee.
Since the formation of Modi government, the government’s financial health has worsened. Under the BJP rule, the government finances have come under severe pressure. Real GST growth in April this year was only 2.83 percent (including GST cess in April 2025). The excise duty cuts of Rs 10 per litre will wash out 40 percent of excise duty revenues. The expenditures like subsidy on fertilizers, higher DA increases, etc. will deepen the fiscal hole. It is estimated that the fiscal deficit will increase by over Rs 3 trillion this financial year.
Apart from creating economic mess, the last twelve years have brought India’s democracy to dangerous crossroads. The BJP government is working as an increasingly centralized political machinery trying hard to capture every institution and silence every dissenting voice. Although democracy-watching organizations have different methods of categorizing democracies, they all classify today’s India as a “hybrid” regime, with a combination of both democratic and authoritarian features. Throughout the years under the BJP’s rule, India has seen an erosion of democratic institutions and norms through suspicious electoral activity, tedious voter registration laws, vague criminal prosecution, and deteriorating civil liberties.
In particular, the Modi government has significantly undermined the purpose of the Election Commission of India’s independent role in holding free and fair elections across India. The opposition parties have repeatedly alleged that the ECI has given the BJP an unfair advantage in the polls, but neither the government nor the ECI seem ready to listen to allegations. The suspicious behaviour of the ECI has brought international attention to India’s electoral system, especially the disproportionate treatment of minority votes.
Opposition leaders have also pointed out the government’s undemocratic implementation of its Special Intensive Revision (SIR) of the voter list. They claim that the ECI has unfairly deleted votes from the ballots and prevented eligible voters from registering with excessive verification requirements.
The past twelve years have also seen massive attempts to jeopardize individuals’ due process rights, allowing for the prosecution of government critics. In fact, the attacks on civil liberties have increasingly escalated, especially toward those who criticize the current administration. The attack has also been mounted on the freedom of speech and the press. These freedoms are so essential for accountability and provide the citizenry with requisite information about the current government and relevant politicians. (IPA Service)
