A Good Time to Reflect

A new year is always a good time to reflect on both the year gone by, as well as what could lie ahead. The year 2015 will go down, in my mind, as the year in which great expectations from the government were belied. Despite some sincere efforts by the Modi government, the economy failed to improve as quickly as people expected or even as much as the government itself had forecast. Indeed, the mid-term review of the economy that has just come out from the chief economic advisor's office moderates expectations - talking about growth in the 7-7.5 per cent range instead of the 8.1-8.5 per cent that was being projected by the government at the beginning of the year. Part of the reason was that the global economy itself was in a state of flux, and the Indian economy was not immune to global uncertainties. But an equally important reason was the failure of the government to push through some crucial reforms - including the GST bill - which would have had significant impact on business and investor sentiment. Also, corporate debt and public sector bank non-performing assets remained a big worry.

Still, there is no reason to be completely pessimistic about 2016. For one, some of the macroeconomic indicators are showing signs of a recovery - albeit a slow recovery. Then, the Modi government seems conscious that it needs to push ahead with economic reforms, and there is a growing realisation that it can do quite a lot through executive action, even if it gets into a logjam in Parliament. Three, oil prices are expected to remain benign for at least much of this year, which would give the government some breathing space. And four, consumer spending has picked up, and there are expectations that even business spending will pick up by the end of this year.

Of course, almost everyone agrees that whatever happens in the short term, the long-term future of India is very good. Over the next two decades, it will be the third most significant economy in the world, behind only the United States and China, which is precisely why our Anniversary Issue is focused on the long term.

I hope you have enjoyed reading through the issue and gained as much from the insights of our eminent columnists as I have.

Happy New Year!