India’s decade of reform: Paving the way for solid growth in the next era

In the last ten years, India has undergone a transformative journey, marked by a series of bold reforms aimed at fostering a conducive environment for growth. Spearheaded by the Modi government since 2014, these reforms have laid a robust foundation for the nation’s economic prosperity in the upcoming decade.

Goods and Services Tax (GST) – Unifying India’s market:


The landmark GST reform of 2017 revolutionized India’s taxation system, creating a unified market similar to the Eurozone. This comprehensive tax overhaul streamlined internal borders issues, simplifying the taxation structure across states. With a credit-based system and lower effective tax rates, GST has not only facilitated the ease of doing business but has also tripled the number of indirect taxpayers to 14 million by June 2023.

Insolvency and Bankruptcy Code (IBC) – Cleansing corporate balance sheets:

The Insolvency and Bankruptcy Code (IBC) of 2016 marked a significant turning point, addressing the rising bad loans in India’s corporate and banking sectors. This time-bound process empowered creditors to take over insolvent companies, leading to profound changes in corporate India. With over 5,000 cases resolved and Rs3.1 trillion recovered as of September 2023, IBC has not only cleaned up balance sheets but also instilled fiscal discipline among promoters.

Real Estate Regulatory Act (RERA) – Boosting buyer confidence:

The Real Estate Regulatory Act (RERA) of 2016 brought transparency to the real estate sector, instilling confidence among buyers. By making it mandatory for developers to secure approvals before launching projects and allocating 70% of proceeds to an escrow account, RERA has transformed the residential property sector. This reform aligns with India’s strong property cycle, driving growth in the economy.

Infrastructure Development – Fueling economic expansion:

In tandem with ‘soft infrastructure’ reforms, India has witnessed an unparalleled focus on physical infrastructure development. The Modi-2 government’s fiscal commitment to infrastructure has tripled government spending to Rs10 trillion between FY20-FY24. Key projects, such as the Delhi-Mumbai expressway, Mumbai Trans Harbor Link, and various metro rail expansions, signify a significant upgrade in India’s physical infrastructure.

Digital Revolution – Driving formalization of the economy:

India’s digitization journey has played a pivotal role in transforming governance and driving the formalization of the economy. Initiatives such as the Unique Identification (UID) program, linking bank accounts via the ‘JAM (Jandhan-Aadhar-Mobile)’ trinity, and Direct Benefit Transfers (DBT) have streamlined welfare mechanisms. The DBT mechanism, facilitating transactions worth ~US$90 billion in FY23, has proven crucial during the COVID-19 relief efforts, showcasing the efficiency of UID-based authentication systems.

Unified Payments Interface (UPI) – Accelerating digital transactions:

The native Unified Payments Interface (UPI) has accelerated the adoption of digital transactions, with monthly transaction volumes exceeding 10 billion and transaction values surpassing Rs17 trillion (US$200 billion) in October 2023. This surge in digital transactions has not only propelled financial inclusion but has also played a vital role in formalizing India’s cash-driven economy.

As India stands at the cusp of a new era, these reforms, ranging from tax overhaul to digital revolution, position the nation for solid growth in the coming decade. The commitment to transparency, fiscal discipline, and innovation showcased in the past ten years sets the stage for India’s continued economic success.

Source: Jefferies: Equity Research