When Bharat first got independent, we saw an inflation rate of 4.54% as a nation, as opposed to the 4.98% today. But don’t let the numbers deceive you. In the last 77 years of independence, the cost of living in India has risen multi-fold. A part of this increase can be attributed to the rising aspirations for luxury amongst Indian buyers. Another prominent reason is the difference in the financial policies of different governments over the years.

As a nation, we have been led by 14 different prime ministers since 1947. The different Governments have delivered vastly varying results on the end of inflation, with sharp changes every time the leadership changed.

Sudden changes, evolving financial goals, & improvement in lifestyle have caused the Indian voters to prioritize financial goals when evaluating manifestos. A phenomenon that is prominently visible in the country’s investing behaviours around election time. Over the years, different governments have taken different approaches towards the Indian economy. In this article, we will be reflecting on the difference in inflation rates and economic conditions under the regime of all the Indian Prime Ministers since independence.

Let’s take a look

Inflation during the reign of the last 15 PMs

Back in 1947, you could buy 10 grams of gold for INR 88.62. As of 2021, the same 10-gram coin started costing you INR 46,000. 1947 was also the year when the value of the rupee was at par with the American dollar. But in 2023, we recorded an average exchange rate of INR 82.5675 against the dollar.

The difference is extreme; the narrative that has led to this economic position is extremely interesting. The story began back in 1947 when the country first found its footing as an Independent Republic; we had the mammoth task of dealing with the aftermath of the 2.5 centuries-long colonial rule.

Surprisingly, the inflation rate during the time of our first Prime Minister, Mr Jawahar Lal Nehru, was amongst the lowest marks our economy has ever recorded. 

A scenario that briskly changed, for the worse or for the better, during the rule of the following Prime Minister, Mr. Shastri. The quick rise can be accredited to nationwide food shortages, & an approaching war with Pakistan. Despite all the challenges, Shastri dedicatedly worked to resolve the issues by encouraging movements like the White Revolution. India saw similar peaks in inflation at the time of Charan Singh, Indira Gandhi, Chandra Shekhar Rao, & Inder Kumar Gujral.

A notable difference in inflation can be seen between the tenure of PM Manmohan Singh, & PM Narendra Modi. During the UPA government, the average inflation rate was seen to be around 8.25%. It has fallen down to 4.98% as of 2023, and the IMF expects it to reduce further during 2024.

This observation is interesting because while PM Manmohan Singh’s tenure was expected to bring economic improvements due to his expertise in the subject of economics, the Modi government delivered better results on the parameters of inflation.

Economists accredited the improvement to Make in India & GST reforms that have made the country financially healthier & expanded the number of taxpayers, respectively. During PM Modi’s tenure, India’s GDP has caught a pace enough to reach 8.4 trillion dollars by 2030 while also being prepared to become the second-largest manufacturing destination after China. The picture was different at the time of PM Manmohan Singh, as we dealt with high inflation, recession, & corruption, amongst other issues.

How does fluctuating inflation influence the Indian Voters?

We live in a financially driven country. A country where people are on a constant hunt to improve their personal finances. It is natural for the voters to evaluate potential PM candidates and governing parties for their goals for the Indian economy. Arguably, this has been the biggest reason why the country has welcomed the Modi Government two times in a row.

Any manifesto that assures the country of a stronger and growth-friendly economy is bound to have people’s attention. In my opinion, if a political party wants to inch closer to the throne, it will have to put forth strong economic aspirations for our country and its people. Can another candidate match the economy-focused approach of today’s BJP? Only time will tell! But one thing’s for sure. India’s economy will continue to hold a central place in the nation’s political environment.