Inside Gujarat’s ‘Modinomics’: How UPI, GST and Infrastructure Changed Business
Modinomics: How Gujarat Became a Laboratory for Digital Payments, Infrastructure and Investment (Image Nirendra Dev)
By NIRENDRA DEV
From JAM and GST to UPI and public capital expenditure, Gujarat offers a ground-level view of India’s changing economic model.
Ahmedabad, September 29, 2026 — An hour-long conversation about India’s economy and governance at a popular tea stall in Ahmedabad’s Lal Darwaja area offered an unusual ground-level perspective on the transformation of business and public infrastructure in Gujarat.
The common refrain among several business operators was that the state had moved towards a more market-oriented economy earlier than many other parts of India. They pointed to reduced red tape, easier digital transactions and a greater emphasis on infrastructure and delivery of public services.
The conversation inevitably turned to what is often described as “Modinomics” — a policy approach associated with Prime Minister Narendra Modi that has combined financial inclusion, digital public infrastructure, tax reform and higher public capital expenditure.
The Jan Dhan-Aadhaar-Mobile (JAM) architecture expanded access to formal banking and digital services, while the Goods and Services Tax (GST) reorganised indirect taxation into a nationwide framework. UPI subsequently changed the way millions of Indians transact.
Today, scanning a QR code to pay a shopkeeper, street vendor, taxi driver or small retailer has become routine. UPI processed 22.64 billion transactions worth about ₹29.52 lakh crore in March 2026, according to NPCI data. For FY2025-26, annual UPI transaction volume reached 24,162 crore and transaction value nearly ₹314 lakh crore. Government data also puts India’s share of global real-time payment transaction volume at about 49 per cent.
“I am a huge fan of the UPI system,” said Rafiq Qadir, 27, from Ahmedabad’s Relief Road. “This is more than just a technology project.”
Yet the economic conversation in Gujarat is not uniformly celebratory. Purbaiben Suratwala, an office worker, said she liked India’s growth story but argued that GDP growth alone could not answer questions about employment and living standards.
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“I look at it as a challenge,” she said. “High GDP growth does not automatically mean enough good jobs.”
Employment remains a central issue in the wider economic debate. Hiral Kulkarni, a student of economics in Gandhinagar, said India would add a large working-age population over the coming years and that job creation would therefore remain critical. Sangeeta Chaudhry, her roommate from Jaipur, also pointed to the challenge of absorbing workers moving beyond agriculture.
The infrastructure push is another defining feature of the current economic model. The Economic Survey 2025-26 says central government capital expenditure has increasingly shifted towards asset creation, with effective capital expenditure reaching about 4 per cent of GDP in FY2025. The FY2025-26 Budget provided ₹11.21 lakh crore for capital expenditure.
The national highway network has expanded from 91,287 km in 2014 to 1,46,195 km, according to the Ministry of Road Transport and Highways.
Foreign investment has also grown over the longer period. DPIIT records FDI inflows of $36.05 billion in 2013-14, while its latest annual data covers substantially higher inflows in subsequent years.
A state government officer in Gujarat described the change in the state’s approach succinctly: “The emphasis should be on capital expenditure.”
The broader argument is that infrastructure investment by governments can reduce logistics costs and create conditions for private investment. Whether that translates into sufficient employment and broader household gains remains one of the key questions facing India’s growth story.
A retired tehsildar in Gujarat offered another perspective, saying that India needed to create enough opportunities for young and skilled people to build their futures within the country.
The debate therefore goes beyond the success of UPI, GST, JAM or infrastructure. For Gujarat and India, the next test is whether digitalisation, public investment and economic reforms can translate high growth into productive employment, higher incomes and sustained private investment.
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