Modi vs MMS: who performed better on the economic front?

·5 min read

2 Years of Modi 2.O: Narendra vs Manmohan, comparison of economic performance

The second anniversary of the Bharatiya Janata Party-led National Democratic Alliance government headed by Prime Minister Narendra Modi (NaMo) falls on May 30.

This comes at a time when India is facing a ferocious second wave of coronavirus which has impacted lakhs of families spreading mayhem and despair.

The party leadership has made it clear that no event will be held to mark the anniversary due to the circumstances caused by the pandemic.

On May 17, 2014, NaMo touted as pro-business and a Hindu nationalist led the BJP to a resounding victory. Millions of Indians bought into Modi's promises of job creation and economic growth to satisfy a bulging youth population.

In the 2019 general elections, the party promised to make India worlds’ 3rd largest world with $5 trillion GDP by 2025.

Its relatively good track record on the economic front coupled with a nationalistic fervour created by the Balakot air strikes, helped BJP score a triple century.

COVID-19 and the resultant lockdowns have derailed economic progress with the country recording a contraction in GDP growth in the financial year 2020-21.

The unexpected second wave threatens to undo the resumption of business activity witnessed after the opening up of the economy during Oct. 2020 to Mar. 2021 period.

The absolute GDP number at the end of FY22 is likely to be almost similar to the value of output at the end of FY20. Essentially meaning, two years of no growth.

How does NaMo compare with Manmohan Singh, former Indian prime minister, on the economic front? Let’s try to find out:

1. GDP growth

In the first seven years of the MMS tenure, GDP growth averaged 7.29%, while the comparable number of NaMo’s tenure is 4.72%. This has been impacted adversely by the -8% GDP growth expected in last financial year (FY20-21) due to COVID.

Excluding the abnormal year FY20-21, GDP growth during NaMo’s tenure improves to 6.84%, marginally lower than MMS.


It’s worth mentioning here that GDP growth during MMS tenure declined sharply in the last 3 years averaging 5.8%, bringing down the overall GDP growth during 10 years to 6.81%.

2. Inflation and Unemployment

Average inflation has been comfortably lower during NaMo’s tenure versus MMS by 180 basis points (1.8%). Price rise was an important issue in 2014 general elections and NaMo seems to have lived up to his promise of bringing down prices. Albeit here the low crude prices have helped a bit.


On the unemployment front, the performance of both leaders has been similar. The unemployment rate shot up to 7.11% last year due to COVID induced lockdowns from 5.36% in FY19-20 thus impacting the overall average of NaMo by 23 basis points (0.23%).

3. Foreign Direct Investment

India has emerged as one of the most favoured FDI destinations (Top 10) due to opening up of many sectors like retail, civil aviation, defence, insurance, construction etc. under the NaMo regime.

While global flows collapsed in 2020 due to the economic fallout from COVID-19, India registered an increase of 19%.


4. Stock Market Returns and Currency

During MMS’s first seven-year term, Nifty50 generated returns of approximately 20% per annum. This has declined to 11% during NaMo’s tenure from the day of announcement of results. The low base effect came into play during MMS’s term as Nifty50 was just 5 years old when he became the prime minister.

Some could argue that the market had been moving upwards since the day of announcement of NaMo as NDA’s prime ministerial candidate in September 2013. Taking this into consideration the CAGR return increases to 15%.



  1. Return of Nifty50 from the day of taking oath (May 22, 2004) to next seven years is taken for MMS.

  2. Return of Nifty50 from the day of results (May 17, 2014) and from the day of NaMo’s announcement as PM candidate of BJP (Sep. 13, 2013) to next seven years.

NaMo had made currency depreciation as one of the main attack points to target MMS. During the first seven years under MMS, INR didn’t move much in relation to the USD. The deprecation of around 30% from Rs 45 to a dollar to Rs 59 happened during the last three years of MMS rule.

During NaMo rule, currency has depreciated by around 25% till date.

5. Exports

Exports have been under pressure in NaMo’s tenure due to rising protectionism, global economic slowdown and decline in commodity prices. COVID-19 has further impacted trade flows. During MMS tenure, exports grew significantly led by the services sector.

Under NaMo the pace of growth of imports have declined as well led by decline in price of crude and ‘Atma Nirbhar Bharat’ program.

Resultantly, the trade deficit in FY20-21 is at similar levels of FY04-05 (first year of MMS tenure). Even excluding the abnormal year, trade deficit in FY19-20 is at similar levels of FY10-11 (seventh year of MMS tenure). Our health of trade has improved.

Figures in USD Million

(Source: and

6. Ease of Doing Business

Our EODB ranking globally has jumped 69 places from 132 in 2011 under MMS to 63 under NaMo on account of structural reforms that include streamlining the process of obtaining a building permit, making starting a business easier and introduction of a goods and services tax (GST).


Other reforms in India include strengthening access to credit as well as making it easier and faster to pay taxes and trade across borders.

To sum up, it’s very difficult to choose one over the other on economic performance as circumstances were completely different during the tenures of the two prime ministers. While MMS had to face the Global Financial Crisis, NaMo is grappling with COVID-19.

From here on, the ability of NaMo to lead to a path of recovery and progress of the economy battered by the pandemic will determine whose legacy prevails.


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