India has witnessed significant economic transformations under the leadership of Prime Minister Narendra

Modi, and his economic policies–popularly known as “Modi-nomics”. This paper examines the key aspects of

between diplomacy and economy and how Indian diplomacy has shaped the prospects of its economic growth

under the Modi regime’s active economic diplomacy.

From being one of the ‘fragile five’ (Yazar Soyadı et al., 2015) to regaining the mantle of the world’s fastest

growing major economy, India has come a long way. In 2013, Morgen & Stanley included India in the fragile

five economies who were vulnerable to capital flight due to large current account deficits and heavy reliance

on foreign investment. However presently, Indian economy is proudly a bright spot on a global dark horizon.

(Georgieva, 2023) Today, it is the fourth largest economy in nominal terms and set to become the third largest

in coming years. (The Hindu, 2025) India’s dream of having a five trillion economy is just imminent. Its forex

significantly dented the growth prospects of the Indian economy, largely negating the decoupling theory which

argues that owing to the rapid expansion of intraregional trade over the past few decades, high savings ratios

and a burgeoning stockpile of international reserves, business cycles in a number of emerging-market

economies had become decoupled from those of the developed economies. (Sebastian Dullien et al., 2010)

India like other economies, was hit by the spillover effects of the crisis due to its increased integration into the

global economy. The crisis led to a slowdown in global demand, affecting India’s export-oriented sectors like

textiles and Information technology (IT) services. Gross Domestic Production (GDP) growth rates declined,

impacting job creation and consumer spending. Indian stock markets experienced sharp decline and foreign

institutional investors withdrew funds. The rupee depreciated against major currencies, causing volatility in the

foreign exchange market.

Therefore, the Indian economy in 2012-13 was facing sudden outflow of foreign capital (as the investors

redirected their funds from emerging nations back into the U.S. dollar) combined with high crude oil prices,

higher inflation, high fiscal and current account deficits, widespread corruption and a perception of policy

paralysis.

Thus, when Narendra Modi took charge as the Prime Minister of India in 2014 and promised to transform the

landscape of India’s economy, he inherited an economy facing several challenges including slow economic

growth, infrastructure bottlenecks, unemployment, wide spread corruption and most importantly a perception

of policy paralysis. Multiple cases of corruption had eroded the public trust and confidence in the government.

The perception of policy paralysis in the previous government was hindering decision-making and

implementation of reforms required to overhaul the economy. There was a need to improve governance and

‘everyone’s participation, everyone’s progress (Sabka Saath, Sabka Vikas). These policies aim to boost

economic growth, attract investments, simplify tax structures, encourage entrepreneurship, and promote

manufacturing and digital initiatives. These policies have aimed to propel the country towards higher growth

and transform India into a developed country by 2047 when it will be celebrating its100

years of

Independence. Over the years, Modi-nomics has been a subject of both praise and criticism, making it

imperative to analyse and assess its impact on India’s economic landscape. Therefore, this paper discusses

some key aspects of Modi-nomics reflected in various policy reforms structural changes initiated during the

period, to evaluate the achievements and failures of Modi government’s economic policies.

landscape. It replaced a complex system of multiple indirect taxes, streamlining the taxation structure and

promoting a unified market. GST has led to improved tax compliance, reduced tax evasion, and increased

government revenue. The all-round benefits of the indirect tax regime are ‘exemplary' and the GST revenue

buoyancy for states has improved to 1.22 after its implementation from 0.72 before the rollout of GST. (The

Indian Express, 2023). Further, the below mentioned graph shows that the GST collection which stood at

92,283 crore in July 2017 has gradually raised to 1,95,936 crore in October 2025 marking a significant growth

in revenue generation.(PTI, 2025b).

Press Information Bureau, Ministry of Finance.

However, though, recently India has streamlined its tax structure under GST 2.0 reforms with two primary

The Insolvency and Bankruptcy Code (IBC) was brought in 2016 to overhaul the corporate distress resolution

regime in India and to deal with the issue of growing Non-Performing Assets (NPAs) of the banking sector.

The IBC is a ‘creditor-in-control model as opposed to the debtor-in-possession system'. (Munjal, 2022) The

is another significant move to deal with the NPAs and help banks to clean up their balance sheets. These

comprehensive measures taken by the government and the Reserve Bank of India (RBI) to recover and to

Despite its successes, the IBC faced challenges like prolonged delays, case backlogs, asset value erosion, and

gaps in handling complex corporate structures and cross-border issues. (Mittal, 2025) A major concern is that

the insolvency process has seen less recovery and more hair-cuts. (New Indian Express, 2025) According to

Micro, Small and Medium Enterprises (MSMEs) form the backbone of India’s economic landscape and serve

as the cradle of entrepreneurship. (NITI Aayog, 2025) In the last ten years of the Modi government, small and

informal businesses—including MSMEs—have experienced significant formalisation, expanded credit access,

and expanded integration into export value chains. The most visible structural change has been large-scale

formalisation: Udyam and Udyam Assist Platform registrations crossed 4 crores by March 2024. (PIB, 2024)

MSMEs continue to contribute around 27–31% of India’s GDP and nearly half of merchandise exports,

indicating stable macro-economic relevance. (PIB, 2025) To help MSMEs scale operations and access better

resources, the investment and turnover limits for classification have been increased by 2.5 times and 2 times,

respectively. This is expected to improve efficiency, technological adoption, and employment generation.

However, MSMEs still face issues of delayed payments, high compliance burdens, uneven access to affordable

working capital, and slower productivity gains. Self-reported employment on the Udyam portal (20.39 crore as

of July 2024) shows expanded enterprise coverage but does not necessarily reflect stable or high-quality jobs.

(PIB, 2024)

The situation of informal economy is even bleaker. India is home to the largest informal economy in the world

and remains a chronic conundrum for scholars and policymakers.(Harriss-White, 2024) Despite, decent

attempts and policy response by the government to formalize economy, informal sector is still growing in

India. The Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2023-24, shows that the number of

COVID-19 pandemic. Translated as ‘Self-Reliant India’, this initiative focuses on reducing import

The quest for the ‘Aatmnirbhar Bharat’ (Self-Reliant India) should not be misunderstood with the trade

protectionism or efforts towards de-globalisation. It is about national self-dependence. It attempts to mitigate

the vulnerabilities of the Indian economy by diversifying supply chain, promoting domestic production and

boosting growth and consumption. The initiative does not attempt to insulate India from the global economy

instead re-calibrates the terms of engagement. It endeavours to make Indian economy more vibrant, resilient

and meaningfully integrated with the global economy. Thus, there is a careful attempt to balance the goal of

growth. Initiatives such as Jan Dhan Yojna, aimed at providing financial services to the unbanked population,

and Digital India, which seeks to connect rural areas through technology, have had far-reaching impacts on

financial access and service delivery. The trinity of JAM (Jan Dhan–Aadhaar– Mobile) combined with the UPI

has significantly improved the financial inclusion in India. Digitalization has rapidly transformed various

aspects of Indian society, economy, and governance, ushering in a new era of connectivity, convenience, and

innovation. Over the years, India has made significant strides in embracing digital technologies, leading to

accessibility, literacy, and security to ensure that the benefits of digitalization are realized by all sections of

society.

of goods and people, facilitating trade and economic growth. According to official data from NHAI, an

unprecedented 50,000 kilometres of National Highways being added in the last 9 years. India had a total of

97,830 km of National Highways in 2014-15 which has been expanded to 1,46,204 km by October 2025.

(Redefining India’s Highways, n.d., 2025) Furthermore, the ‘Sagarmala’ project focuses on enhancing port

expected to drive maritime trade, boost industrialization along coastal areas, and create employment

India, with its vast and youthful population, is positioned to leverage its demographic dividend as a powerful

asset for economic growth and development. The Skill India initiative, launched in 2015, has emerged as a

crucial driver in harnessing this potential. Modi government has prioritized the various schemes and initiatives

under the Skill India mission to equip India’s workforce with the skills needed for the future.(Building a

Future-Ready India, n.d., 2025). India’s demographic advantage is evident, with more than half of its