That the GDP numbers would be released on May 31 was predetermined in the National Statistical Office’s (NSO) release calendar. The fact that they have come a day before the last phase of elections in the 2024 election cycle is a coincidence. This notwithstanding, there is some merit in using the latest GDP numbers to do a long-term comparison of the second Narendra Modi government’s economic performance with the past. To be sure, any such comparison needs to be read with the fact that the current government’s cumulative performance was adversely affected by a massive economic disruption during what was a once in a century pandemic which saw India’s GDP falling by 5.8% in 2020-21. No other government in India’s history has faced such a disruption.

With this caveat in place, here are three charts which give a long-term summary of the second Narendra Modi government’s economic performance.

Modi 2.0 has the lowest CAGR of GDP among all governments since Atal Bihari Vajpayee’s full-term government

The compound annual growth rate (CAGR) of GDP between 2018-19 and 2023-24 — this covers the five-year period during the second Narendra Modi government — comes out to 4.4%. This number is 4.5% for Gross Value Added (GVA). This is the lowest this number has been since the Atal Bihari Vajpayee’s National Democratic Alliance (NDA) government of 1999-2004. But it is a number that has nothing but statistical significance, given the pandemic.

We have not compared it with previous governments because of two reasons: political instability between 1996 and 1999 and the Indian economy in the pre-reform era or just after reforms under the Narsimha Rao government was very different compared to what it is today. Things such as infrastructure overhaul and India’s big strides in modern services such as IT only started during the NDA government because of both domestic and external factors.

To be sure, it is the first Modi government which delivered the highest CAGR for GDP — between 2013-14 and 2018-19 under the existing GDP series. In terms of CAGR of GVA, UPA I (2003-04 and 2008-09) and the first Modi government are tied in terms of highest growth. The UPA growth numbers are slightly higher when the 2004-05 GDP series is used (it was discontinued in 2013-14). (See Chart 1)

10 years of Modi government saw a lower growth than the UPA decade

Once again, the results could have been very different had the pandemic not happened. However, the existing numbers give an advantage to the UPA decade compared to 10 years of the Narendra Modi government. The decadal CAGR of GDP for the UPA and Modi decades are 6.8% and 5.9% respectively. (See Chart 2)

To be sure, the Modi government has defended its track record on the ground that growth under its regime has been based on better macroeconomic fundamentals than that of the UPA era. This claim has been repeated in multiple government documents including the White Paper issued by the second Modi government in the last session of the parliament before the elections. Both the BJP and the Prime Minister repeatedly highlight the fact that India ended the UPA period with high inflation and domestic and external deficits and the seeds of the twin balance sheet crisis were sown by exuberant lending and investment decisions with government owned banks leading the charge.

The opposition, on the other hand has often argued that high inflation during the UPA II period was a result of a commodity price super cycle and the criticized the current government for putting a squeeze on the incomes of the informal sector which employs an overwhelming share of Indian workers. Election results rather than economic statistics will give a better answer to who was right in this debate.

Will inflation matter more than growth?

What could play a bigger role in the resolution of this debate is the fact that the second Narendra Modi government has seen a higher inflation than the first one. In India, where incomes of a vast majority of people are not indexed to prices, inflation plays a bigger role in political economy than just growth. Because the current CPI (consumer price index) series only starts in 2011-12, it is not possible to compare inflation during the UPA and Modi decades as a whole. To be sure, overall retail inflation was 10% and 9.3% in 2012-13 and 2013-14, the last two years of the UPA government. (See Chart 3)