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As the Narendra Modi-led government marks its first year in office on Tuesday, the American media has taken a critical view of his accomplishments, saying his flagship “Make in India” drive is “so far mostly hype”, job growth remains sluggish amid “outsize expectations”.

This screenshot taken on May 26, 2015, shows the “Wall Street Journal” article on the Narendra Modi government’s first anniversary. The paper said the “Make in India” drive “is so far mostly hype”.

“India’s Modi at One Year: ‘Euphoria Phase’ Is Over, Challenges Loom,” reads a headline in the Wall Street Journal of an article on Mr. Modi’s first year as Indian Prime Minister.

“A year after Indian voters handed Narendra Modi a once-in-a-generation mandate for change and economic revival, messy realities are sinking in,” the WSJ report said.

It said that Mr. Modi’s “Make in India” drive, aimed at supercharging manufacturing growth, “is so far mostly hype”.

It cited economic parameters like exports to say that the “economy is merely limping along”.

Inflation-adjusted lending for capital investment last year fell to a level not seen since 2004, it said, adding that exports were down for the fifth straight month in April, corporate earnings were dismal and foreign institutional investors have pulled around $2 billion out of Indian stocks and bonds in May so far.

The New York Times, in a news analysis, said Mr. Modi must face the reality that much of his agenda is still only potential.

“From abroad, India is now seen as a bright spot, expected to pass China this year to become the world’s fastest-growing large economy. But at home, job growth remains sluggish. Businesses are in wait-and-see mode. And Modi has political vulnerabilities, as parliamentary opposition leaders block two of his central reform initiatives and brand him ‘anti-poor’ and ‘anti-farmer’,” the NYT article titled “After a Year of Outsize Expectations, Modi Adjusts His Political Course for India” said.

It said “most formidable of all is a problem” Mr. Modi has “made for himself: outsize expectations that he would sweep away constraints to growth in India, like stringent laws governing labour and land acquisition.

The NYT quoted senior vice-president at leading Indian garment exporter Orient Craft’s Vimarsh Razdan as saying that the Modi government’s “image became larger than they themselves.

“They have become superheroes. And everyone knows superheroes don’t exist,” he said in the report.

The WSJ article said that while Mr. Modi has swaggered across stages from New York to Paris to Sydney, helping put the country back on investors’ maps, “on other key fronts, Modi has moved less decisively, frustrating investors who hoped for bolder change after last year’s election.”

His government has avoided privatising state-run banks and companies, which could trigger unpopular job cuts.

Despite vows to improve India’s reputation for unpredictable tax collection, the government has hit investors with demands for back taxes they say they should not have to pay, it said.

The leading U.S. dailies did give credit where due to the Modi government, saying as he marks the anniversary of his swearing-in, he can point to some accomplishments.

The WSJ report said Mr. Modi has allowed more foreign investment in railways and defence and helped cut red tape.

His government has also deregulated fuel prices and permitted private competition in coal mining-“market-friendly moves designed to attract investment.”

His administration has also helped open millions of bank accounts for the poor and created new pension and insurance programs.

It quoted Krish Iyer, president and chief executive of Wal-Mart Stores in India, as saying that the company is “seeing a lot of progress in ease of doing business. We feel encouraged by the market- and consumer-driven policies of the government.”

The NYT analysis said chief executives feel that since Mr. Modi came to power, India’s business culture has “indeed changed“.

“They rejoice that they no longer have to notarise all documents submitted to the government and say that it is far easier to find bureaucrats at their desks during the workday,” it said.

“By most measures, India’s economy has had a good year,” the NYT report said adding that India is heavily reliant on imported oil, and plunging prices have cut the cost of government fuel subsidies, allowing the authorities to rein in a chronic budget deficit.

Inflation fell to 4.87 per cent in April and foreign direct investment has risen by more than 25 per cent, to $28.8 billion in the 2014-15 fiscal year.

It noted other “flurry of changes” that the Modi government introduced including deregulating prices for diesel, petroleum and cooking gas, and raising limits on foreign investment in the defense and insurance sectors to 49 per cent.

Coalfield leases, found to have been sold at artificially low prices, were reallocated through a transparent process as were telecom spectrum allocations, it said.

‘Rate of poverty reduction fastest under UPA II’

Chief Economic Advisor Arvind Subramanian said on Tuesday that the rate of poverty reduction achieved during the five-year period from 2005-2006 to 2011-12 was the fastest in the history of the country.

Addressing a press conference on the state of the economy to mark the one-year anniversary of the Modi government, he made a strong case for an aggressive interest rate cut by the Reserve Bank of India, which is scheduled to announce its Monetary Policy review on June 2, and also said that there was a need for the Modi government to find ways of relieving the distress in rural incomes.

“In the last few years, our economy has not done as badly in reducing poverty as some people will have us believe…. It was due to the fast GDP growth,” Dr. Subramanian said of the five-year period from 2005-2006 to 2011-12 during which the Dr. Manmohan Singh-led UPA Government was in office. He listed the policy steps the Modi government took and said: “In one year you can argue that more could have been done or that it could be done faster but I think the reforms agenda has been substantial.”

Not much pick-up in new projects

Giving what he called an “interim update” of the economy, the CEA said that though the number of stuck projects was coming down, there was not much pick-up in new projects. “We need to identify the reasons why projects are stalled and find the mechanisms to unblock them…. the private sector is not investing in new projects as a legacy of the boom period.”

In the short term, economy needed support to boost consumption and private investments for stronger growth, Dr. Subramanian said. “Looking at the analysis of what is the inflation forecast, what is the fiscal consolidation, what is the international environment...and how monetary policy should respond, I think there is scope for monetary easing,” he said. He also cited the low rate of inflation and under control fiscal deficit and said that India must act to keep its currency competitive in view of aggressive rate cut policy of China and other countries. “China is cutting interest rates quite aggressively. That makes their currency even more competitive and has implications for Indian exports as well as imports from China and manufacturing on the whole. So we need to respond accordingly.”

Giving an indication of the differences of opinion within the Modi government on its Goods and Services Tax (GST) proposal, Dr. Subramanian said that the move to allow manufacturing States to levy one-per cent additional tax on supply of goods as part of GST has the potential to undermine the Make In India initiative. “While GST is a destination-based tax, the one-per cent additional tax is proposed to be origin-based tax which is against the concept of GST…. It will undermine the Make In India by encouraging imports rather than inter-State movement of goods… We should use the time we have got [while the select committee examines the GST bill] to re-examine it.”

The additional one-per cent tax to the integrated GST, or IGST, was allowed to be imposed after producing States like Gujarat and Maharashtra argued that they will lose out to consuming States as the GST would be collected at the point of consumption rather than the place of production.

Here are the key points from Mr. Subramanian’s analysis :