A Decade Of Disruption: PM Modi’s Economic Overhaul And The Road Ahead

When Narendra Modi walked into South Block in May 2014, his first Cabinet decision set the tone. Within hours, the government constituted a Special Investigation Team on black money, headed by retired Justice M.B. Shah, a move the Supreme Court had urged since 2011 but the UPA never acted on. For the BJP, it was both symbolism and intent to be seen as tougher on illicit wealth and swifter in execution than its predecessor.

Two years later, Prime Minister Modi delivered the most dramatic economic gamble of his tenure. On November 8, 2016, 86% of India’s currency was declared invalid overnight. The stated goals were to flush out black cash and counterfeit notes. What followed were serpentine queues at banks and a sharp, but temporary, hit to economic growth. Yet demonetisation also left an imprint by nudging millions toward digital payments, lifting electronic transactions and kick-starting the formalisation of India’s financial system.

Rewriting the tax playbook

Few reforms were as sweeping as the Goods and Services Tax (GST), introduced in July 2017. By merging 17 state and federal levies into a single destination-based tax, GST widened the tax net and lifted collections.

Gross indirect tax collection before GST (FY 2016-17) was about Rs 7.19 lakh crore. In FY 2022-23, GST collections rose to approximately Rs 18.07 lakh crore. Most recently, for FY 2024-25, gross GST collections reached Rs 22.08 lakh crore, marking a record high.

The GST Council has since trimmed rates and plugged gaps. This September, it cleared “GST 2.0,” reducing four slabs to two — 5% and 18%, with 40% reserved for luxuries and sin goods—a simplification aimed at easing compliance for businesses and consumers alike.

Alongside indirect tax reform came sharp cuts in corporate tax rates. In 2019, the government slashed rates from nearly 35% to 22% for existing firms and 15% for new manufacturing units. The move made India more competitive and, after an initial dip, boosted collections from Rs 6.5 lakh crore in FY20 to Rs 8.6 lakh crore two years later. But the windfall to companies came at a fiscal cost of about Rs 1.84 lakh crore in FY21. In 2023, personal taxes too were overhauled with a new, exemption-free regime offering lower slabs. While many welcomed its simplicity, a majority of salaried taxpayers have stuck with the old system to retain deductions.

In the 2025 Budget, the government went further raising the zero-tax threshold under the new regime to incomes of up to Rs 12 lakh and tabling a new Direct Tax Bill aimed at widening the base and simplifying compliance.

Cleaning up the banks

If taxation rewired how the state raises money, banking reforms reshaped how it circulates. The Insolvency and Bankruptcy Code (IBC), passed in 2016, forced time-bound resolutions of distressed firms. By 2024, nearly 8,000 cases had entered the system; resolution rates rose steadily, and gross NPAs dropped from 11.2% in 2018 to 2.8%.

Meanwhile, the government poured Rs 3 lakh crore into recapitalising public-sector banks and shrank their number from 27 to 12. The results are visible. In FY24, PSU banks posted record profits of Rs 1.41 lakh crore, while bad loans slid to near 3%.

Critics argue this revival leaned heavily on taxpayer funds and deep creditor haircuts, but even they concede that bank balance sheets are healthier than a decade ago.

Banking the unbanked, wiring the economy

Perhaps the Modi government’s most far-reaching achievement has been financial inclusion. The Jan Dhan Yojana, launched in August 2014, has opened more than 56 crore accounts, with deposits topping Rs 2.68 lakh crore. Two-thirds of these are in rural areas, and over half belong to women. These accounts now serve as direct benefit transfer pipelines and gateways to collateral-free loans. Still, 15–20% remain dormant, underscoring the gap between access and active use.

Digital India has turbocharged this inclusion. Internet users rose from 25 crore in 2014 to 97 crore by 2024, even as data costs collapsed. UPI, launched in 2016, now processes 18.4 billion transactions a month worth Rs 24 lakh crore which is 85% of all retail digital payments.

Factories, finance and the future

Industrial policy moved from rhetoric to incentives. Make in India, new corridors and PLI schemes pulled investment into electronics, autos and pharma, with output and mobile production surging. Yet manufacturing’s GDP share remains stuck near 17%, well below the 25% target, while PLI payouts have lagged. Persistent bottlenecks in land, logistics, power and skills still weigh on large-scale job creation.

The Production-Linked Incentive (PLI) scheme, launched in 2020, has approved more than 760 projects, bringing in Rs 1.61 lakh crore of investment and an estimated 11.5 lakh jobs. Yet progress is uneven. As of 2024 only 2% of committed payouts had been disbursed, and high-tech sectors generated fewer jobs than expected.

Asset monetisation is the newest experiment. Leasing highways and power lines attracted capital, but railways and telecom lagged behind. The next cycle is far more ambitious, with plans to raise Rs 3.5 lakh crore from railway track leasing alone. Execution, again, will be the test.

Amid reforms, navigating the pandemic

The Covid-19 shock in 2020 tested the government’s reformist credentials and fiscal discipline like no other crisis. Unlike many peers that splurged on stimulus, the Modi government kept direct spending contained — about 2% of GDP in the first year — relying instead on credit guarantees, liquidity support and targeted welfare through free foodgrains and Jan Dhan transfers.

Critics said the caution slowed recovery for the battered informal sector. Supporters countered that it kept debt in check and preserved space for later capital spending. By 2022–23, India was back among the fastest-growing major economies, with record infrastructure outlays even as fiscal consolidation stayed on course.

The balance sheet

A decade of reforms has reshaped India’s economy. Tax rationalisation, bank clean-ups, digital inclusion and record-breaking payments systems have delivered tangible progress. But the journey has not been linear. Demonetisation imposed sharp costs without delivering its promised haul of black money. GST’s early complexity burdened smaller firms. Many Jan Dhan accounts remain under-utilised. PLI delivery has been patchy. And corporate tax cuts left fiscal trade-offs unresolved.

As Narendra Modi turns 75, India is more formalised, digital and globally integrated than at any point in its history. The challenge now is to deepen these gains to activate dormant accounts, simplify taxes further, build skills and infrastructure, and carry unfinished reforms in land, labour and agriculture. The reforms of the past decade reshaped the architecture while the next phase will determine whether that architecture can deliver sustained, inclusive growth.