THE ENDURANCE ECONOMY

Demonetization, GST, Covid-19, trade tariffs, and now a Middle East war. India has seen it all and kept moving. The question is whether it can keep doing so

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Economic disruption has been a defining feature of India’s story since 2016, two years into Narendra Modi’s first term as Prime Minister. Some of it was policy driven, some forced upon the country by circumstances beyond its control. Together, these have left a trail of considerable economic stress.

The government-driven interventions were planned and intended for the country’s long-term benefit, even if they caused short-term economic headaches.

The first of these was the demonetization initiative of November ’16, when the `1,000 and old `500 notes were withdrawn from circulation. Long queues formed outside banks as citizens rushed to exchange their notes for the new `200 and `2,000 denominations.

Normal business activity was badly disrupted and the short-term pain was palpable. To the government’s credit, however, the situation was managed adroitly and the economy stabilized within two years.

The following year, in 2017, the Modi-led government introduced the Goods and Services Tax (GST) regime. This too created short-term disruption, but was similarly overcome over the next two years.

Then came Covid-19, which severely damaged the global economy. For nearly two years, economic activity ground to a halt across the world, countless small businesses were wiped out, and joblessness spiked sharply.

Although the pandemic was largely overcome by end-2021, the global economy needed a further two years to recover - and even then, not fully. By mid-2023, however, the worst was behind us and the world exhaled with relief, hopeful that rapid economic progress lay ahead.

2024 and 2025 were largely normal years, though the war in Europe and the Hamas terrorist attack on Israeli civilians in late 2023 - and Israel’s subsequent military response against Hamas, Hezbollah, and allied groups - did cause periodic alarm.