Prime Minister Narendra Modi's first four years in office have been anything but smooth, with the economy witnessing its own share of ups and downs.
Benchmarks Sensex and Nifty breezed past 36,000 and 11,000, respectively, this January — that's a first. And investors smiled.
But macros worsened from time to time. Expectations were skyhigh when Modi came to power in May 2014. Things have just got a little harder since.
To give the credit where it's due, planning and policy execution have been the talking points in a few cases.
Which is to say, there are hits and misses. Let's map them.
Sensex, Nifty and other major indices
Midcaps as well as smallcaps created huge wealth for investors on Dalal Street during the past four years. The BSE Midcap rallied 87 per cent whereas the smallcap index soared 92 per cent during the same period. Benchmark NSE Nifty and BSE Sensex advanced 44 per cent and 41 per cent, respectively, during May 26, 2014, and May 25, 2018.
Top largecap multibaggers
As many as 15 largecap stocks from FMCG space, NBFCs and auto sector rallied more than 3-fold during the past four years. Bajaj Finance skyrocketed 964 per cent during the last four years, followed by Bajaj Finserv (581 per cent), Britannia Industries (570 per cent), Ashok Leyland (355 per cent) and TVS Motor (354 per cent).
Top small and midcap money multipliers
Small and midcap stocks rallied up to 9,577 per cent during these four years. Ducon Infratechnologies jumped to Rs 30 on May 25 this year, from Rs 0.31 on May 26 in 2014. Other stocks, including Uniply Industries, Medicamen Biotech, V2Retal, Minda Industries, KEI Industries, Avanti Feeds and Indiabulls Ventures, rallied up to 7,234 per cent during the same window.
Domestic institutional investors (DIIs) overtook foreign portfolio investors (FPI) in terms of net investment in domestic equity markets over the past four years. DIIs pumped in Rs 2.11 lakh crore in equities since 2014 whereas FPIs invested Rs 1.86 lakh crore. This year, DII inflow is 45 times higher than FPI inflows. FPIs have poured Rs 1,027 crore in equities in 2018 so far whereas DIIs have invested Rs 46,649 crore.
Jimeet Modi of Samco Securities sees implementation of goods and services tax (GST), IBC and recapitalisation plan for addressing the NPA issue, FDI in defence and railways, controlled inflation and improving business environment as hits for Modi. On the other hand, he believes demonetisation, slower GDP growth, lacklustre growth in jobs and lagging private investment as misses.
Indias real gross domestic product (GDP) growth averaged 7.3 per cent between fiscals 2015 and 2018, a tad lower than 7.5 per cent in the previous five years, according to a Crisil report. This is in spite of the two big domestic disruptors of demonetisation and GST which pulled down growth in fiscal 2018, and an environment of monetary and fiscal restraint.
“While the economy had witnessed higher growth rates before the NDA governments regime, it was on the back of unsustainable policy stimulus,” said Crisil.
Barring the stress in fiscal 2018, when the fiscal deficit slipped to 3.5 per cent of GDP from the budgeted 3.2 per cent, the NDA regime has seen fiscal consolidation. According to Crisil, from an average 5.2 per cent of GDP between fiscals 2010 and 2014, the figure came down to 3.8 per cent between fiscals 2014 and 2018, helped by fortuitous winds from lower crude oil prices, which reduced the oil subsidy burden and hike in excise duties on petrol and diesel. In the absence of such hikes, the fiscal deficit between fiscals 2014 and 2018 would have been on an average 80 bps higher.
Current account deficit
Indias current account deficit (CAD) has almost halved in the past four years, compared with the previous five. While most of the decline in CAD can be attributed to good fortune, given a decline in oil and commodity prices, some policy measures such as curbs on gold imports also helped moderate the deficit, Crisil said.
However, with oil prices trending up, CAD has started rising again from 2017-18. A rise in core imports (non-oil, non-gold imports) has also exerted upward pressure as domestic industry – hit by the twin disruptions of demonetisation and GST – could not cater to the demand.
Investments have remained weak in the past few years. The investment rate or share of gross fixed capital formation (GFCF) in GDP has come down from an average 33.6 per cent between fiscals 2010 and 2014 to 31 per cent between fiscals 2015 and 2018. The slowdown is largely attributed to lower household investments in housing and subdued private sector investment due to poor capacity utilisation and debt overhang.
Lower export growth
Export growth on average has tumbled to -0.2 per cent on-year in the past four years compared with 14 per cent in the preceding five. Both external and domestic — mainly GST-led — factors contributed to the slowdown.