Life is divided into three terms - that which was, which is, and which will be. Let us learn from the past to profit by the present, and from the present, to live better in the future. 
 

	- William Wordsworth
 The year 2015 had some fascinating developments as far as India's political <keyword id="34412" type="ORGANIZATION" weightage="100" keywordseo="economy">economy</keyword> and social sectors are concerned. The country had its share of ups and downs in different spheres. In the domain of external affairs and foreign policy, it had many ups and some downs. The ups included the country breaking new ground with the prime minister leading from the front. The year included the PM's many successful visits abroad and inviting state guests to India. These included hosting President <keyword id="15962" type="PERSON" weightage="100" keywordseo="Barack-Obama">Barack Obama</keyword> for the Republic Day celebrations, hosting Chancellor <keyword id="76" type="PERSON" weightage="100" keywordseo="Angela-Merkel">Angela Merkel</keyword> in October followed by the visits of heads of state and leaders of Africa in the third Indo-Africa Forum Summit, and hosting Prime Minister <keyword id="590894" type="PERSON" weightage="100" keywordseo="Shinzo-Abe">Shinzo Abe</keyword> for the Ganga Aarti in Varanasi. On the negative side, there was continued dominance of domestic politics trumping talks with some leaders in the South Asian region and the continuing border issues with some of India's neighboring countries. 

	On the political economy front, several things changed. Some for the good others for the worse. The brute majority force and especially the insensitive remarks post the communal violence incidents were checked by the people voting in Bihar. Before this too a setback in Delhi sent a clear signal of focusing on development and governance, the two things for which the government was chosen. Also, the election results in Delhi and Bihar reflected that the honeymoon period for the government seemed to be over. 
 On the economic front, several positives emerged which show the signs of a recovery albeit a slow one. The relatively high <keyword id="35050" type="CITY" weightage="100" keywordseo="gdp">GDP</keyword> growth, low <keyword id="22195" type="COMPANY" weightage="100" keywordseo="Inflation">inflation</keyword>, a surge in private consumption and increased government investment, substantial investment in highway sector, positive developments in railways and power sector performance seem to be a positive for the government. The negatives seemed to be stalled private investment due to massive debt/ leverage, rising NPA's of banks, spiraling pulse prices, and falling exports. The decision of greater decentralization and acceptance of <keyword id="25455" type="ORGANIZATION" weightage="100" keywordseo="finance">Finance</keyword> Commissions recommendations is a welcome institutional step for strengthening the federal structure of the country. 

	On the legislative reforms agenda, people had expected much more legislative action but various sessions were rendered unproductive due to stalling of key reforms by the opposition. In spite of this, the government seemed to have been able to maneuver in particular areas where reforms could have been done without legislative action, most notably in the roads, railways and power sectors. 
 

	In the sphere of education, healthcare and law and order some activity was observed but much more remains to be done. The ASER report pointed to the alarming statistics of children's learning outcomes at the primary level. Similarly, the healthcare debates continued to be around spending and increasing access to healthcare especially in rural areas. In law and order much has remained the same, as there is a pendency of 30 million cases. The landmark judgement on NJAC showcased that the Judiciary will retain the right to appoint judges. 
 An important question now to ask is where does India go from here. In the next year, i.e., 2016 on the external front, foreign policy calibration is likely to continue expected lines. No significant breakthroughs in the neighborhood but increased engagement in the international arena and use of geopolitics and geo-economics to drive <keyword id="6362476" type="ORGANIZATION" weightage="100" keywordseo="investments">investments</keyword> into India. 

	On the political economy, front state elections are expected in the southern and eastern belt. Assam, West Bengal, Kerala and Tamil Nadu as well as the UT of Pondicherry will most likely see elections in 2016. Will this tip the balance in favor of the incumbent government or away from it only time can tell.
 

	On the economic front, things are looking good for India as commodity prices are expected to stay low amid global glut caused due to falling Chinese demand. India's exports will be an area to look out for on the negative side. Another area to watch out for is the monetary tightening speed of the Federal Reserve. This could have consequences of a weaker rupee against the dollar and chances of capital flight. But overall the country seems well poised for growth amidst stumbling BRICS. 
 

	Some positive news is expected in the legislative arena. Members of opposition in Rajya Sabha may just tip the balance closer where the opposition may just become irrelevant as quite some incumbents are will retire. This may just help see some legislative action in the year ahead. The pace of legislative reforms could help India's internal economy as well will have a crucial bearing on India's trade relationships.
 

	In the social spheres namely education, healthcare and law and order much is thought to be expected lines. The crucial problems will persist; the government and the institutions of the state must focus on improving outcomes in all these spheres. 
 

	Overall what will 2016 hold for India only time can tell? It is in a better position than other BRICS economies to be an engine of global growth
 

	(The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India. Amit Kapoor is Chair, Institute for Competitiveness &amp; Editor of Thinkers. The views expressed are personal. Amit can be reached at amit.kapoor@competitiveness.in and tweets @kautiliya)

	 
	 
	Image credits: indiatimes

The year before and the year ahead

NEW DELHI: Lieutenant governor Najeeb Jung may be cornering credit for ending <keyword id="260213" type="PERSON" weightage="40" keywordseo="Arvind-Kejriwal">Arvind Kejriwal</keyword>'s dharna but sections of <keyword id="1575" type="ORGANIZATION" weightage="20" keywordseo="Congress">Congress</keyword> seem to be unhappy with him for providing what they call an escape route to the Delhi chief minister when he had his back to the wall and the Centre could have twisted the knife. 
 
Congress ranks feel Kejriwal was at his weakest during his latest mass protest, drawing criticism from people and press alike and without compensation in the form of crowds. His outbursts, use of "inelegant" language and making light of the Republic Day celebrations had all been seen as detrimental to his cause. After having been on a roll since he launched his agitation and then a breathtaking electoral debut, the plucky anti-graft crusader suddenly appeared to have boxed himself in with what was seen by many as a petulant protest. 
 However, just when he appeared to have been pinned down, the <keyword id="6356116" type="CITY" weightage="100" keywordseo="LG">LG</keyword> threw him a lifeline which a grateful Kejriwal grabbed with both hands, quickly going on to project as a triumph what was at best a face-saver. "We had him by his jugular when we allowed him to slip away. A good opportunity to corner him was lost because the matter was seen as a law and order issue rather than a political problem," said a source in the Congress familiar with the sense of regret in the higher echelons of the party over what they called "political mishandling". 
 On record, Congress spokesperson Randeep Surjewala praised both the LG as well as home minister Sushilkumar Shinde for defusing the standoff with <keyword id="6356115" type="CITY" weightage="100" keywordseo="AAP">AAP</keyword> with maturity and tact. 
 
Significantly, a statement issued later by AICC general secretary Ajay Maken contradicted reports that Congress vice-president Rahul Gandhi was unhappy with Shinde. That, however, didn't leave people any wiser about Rahul's views on the LG's handling of the situation. 
 
The nuance was seen as important against the backdrop of speculation that the new Congress boss made no secret of his disappointment when he reviewed the developments of the day with his colleagues late on Tuesday evening. 
 
Sources explained that the LG committed the mistake of seeing the flexibility of AAP, which drastically scaled down its demand, as a breakthrough, losing sight of the opportunity that had suddenly emerged to nail the agitators. 
 
Bereft of crowds and having to play a street protester and chief minister at once, Kejriwal climbed down from demanding handing over Delhi Police to Delhi government and settled for two police persons, one an SHO and another a sub-inspector with PCR, to be sent on leave. 
 
Congress sources said while the LG must have felt happy that he had managed to get the agitators off the road for the cheapest price, he failed to recognize that Kejriwal, given the dire straits he was in, was only too happy to sneak through the escape route. 
 
 
 
Significantly, the compromise formula, sugarcoated as an "appeal" to provide Kejriwal with a cover, came as a surprise even to officials in the home ministry who were dealing with the stalemate. Sources in the ministry said officials as well as Intelligence Bureau director Asif Ibrahim were in favour of stretching the battle of nerves in order to tire out the agitators. They were not fazed by the looming possibility of the dharna entering into Republic Day, and were prepared to hold the event by cordoning off the protest site. 
 
The sense of regret appeared palpable on Wednesday when indications emerged that Kejriwal may like to repair his losses by implementing his plan to fast-track investigations into alleged corruption in Delhi Jal Board and the execution of schemes related to Commonwealth Games 2010. Both decisions can have serious implications for former CM Sheila Dikshit. 
 
Congress sources agreed that the failure of the protest did not reflect a dip in Kejriwal's popularity in the constituencies he poached from Congress, but they drew considerable comfort from AAP's failure to mobilize crowds. AAP leaders had frantically sent SOS messages to people to march to North Block where the home ministry is headquartered, but to little avail. The supporters who propelled the greenhorns to a grand debut refused to march to ground zero even after its leaders screamed at the police for committing brutalities on "peaceful protesters". 
 
This coupled with the fact that Kejriwal was seen as trivializing the sentiments attached to Republic Day suddenly seemed to have enhanced Congress's options versus the plucky rookie. Failure of the agitation would have deterred Kejriwal from hitting the streets yet again, besides denting his image among the groups he weaned away from Congress. "Alas, government failed to seize the moment," said a senior Congress source.

Congress Upset With Lieutenant Governor For Letting Cornered Arvind Kejriwal Off The Hook

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Of all the fast-growing BRIC countries, only India stands strong right now. Its economy seems perfectly structured to handle our delicate, and dangerous, global market.
A year and a half ago, emerging markets fell into chaos when the Federal Reserve signaled that the American economy had improved enough to end its asset-buying program, and investors began pulling out of foreign markets. 
India was in a vulnerable place then - its current account deficit had been at 6.9% in late 2012, and outflows hit the economy hard. Plus, inflation was on the rise and growth was stagnating.
But today, while much of the world is in dark place economically - Brazil is embroiled in a <a href="http://www.businessinsider.com/r-morgan-stanley-sees-petrobras-scandal-write-offs-of-as-much-as-81-billion-2014-11">corruption scandal,</a> <a href="http://www.businessinsider.com/afp-russia-to-lose-some-40-bn-a-year-due-to-sanctions-minister-2014-11">sanctions</a> continue to constrain Russia's economy, China is slowing down, and <a href="http://www.businessinsider.com/europes-policies-are-failing-the-unemployed-2014-11">unemployment persists</a> in the EU - India stands out as a star performer: the one emerging market perfectly positioned for growth. 
So how did massive, decentralized India - home to 1.3 billion people, five major religions, and more than 20 official languages - get to this point? 
<div class="KonaFilter image-container display-table"><div><div class="image on-image"></div></div></div>
Let's start with Modi. 
In May's general election, Narendra Modi shot to power with a 52 percent majority for his Bharatiya Janata Party (India's first majority government in 30 years) and some serious promises to whip the economy into shape.
He'd campaigned as a pro-business candidate who turned his home state, Gujarat, into a flourishing investment destination. So, with a comfortable cabinet majority, everyone hoped he could pull off reforms at the national level too. 
One early challenge was the budget, which came out in July. With it, Finance Minister Arun Jaitley announced plans to reduce the fiscal deficit, cut subsidies, invest in infrastructure, boost domestic savings and investment, and introduce a GST. 
The new administration also cut down the number of cabinet members to reduce inefficiencies and began <a href="http://www.businessinsider.com/r-big-brother-modi-is-watching-indias-bureaucrats-2014-10" target="_blank">tracking public employees' attendance</a> at work with a video surveillance system. 
Six months into power, Modi's government has made important strides toward economic growth, and it has already started to <a href="http://www.businessinsider.com/world-market-rally-continues-2014-11">boost investor confidence</a>: 
<div class="KonaFilter image-container display-table"><div><div class="image on-image"></div></div></div>
But Modi is not the only reason investors are so confident. 
India is also one of the least-exposed emerging markets to China, which is now facing mounting deflation fears, a collapsing housing market, and an economy growing at its <a href="http://www.bloomberg.com/news/2014-11-08/china-exports-bolster-economy-as-external-demand-strengthens.html">slowest rate in decades</a>.
<div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"></div></div></div>Though China and India share a 2520-mile border, they have never been great friends, and now that strained relationship is helping India. 
Researchers predict India will focus increasingly on import substitution and domestic demand-led growth going forward. It's better-suited to do this than most countries, because its reliance on external demand is already so low. 
Favorable demographics also help the picture: India's dependency ratio is declining and almost 30 percent of the population is <a href="http://www.businessinsider.com/8-charts-that-show-how-indias-prime-minister-plans-to-copy-chinas-growth-boom-2014-9">under the age of 14</a>. Those people will make up the country's consumers, employers, workers, and taxpayers in the decades to come. 
Think of how different that is from China's <a href="http://uk.businessinsider.com/the-one-terrifying-chart-that-shows-a-massive-chinese-slowdown-is-totally-unavoidable-2014-11">demographic future</a> where an aging population will eventually make for a high dependency ratio. 
Not bad, India. Here's what else is going on: 
<ul>
<li>Consumer confidence is growing: auto sales grew at 20 percent in September and October and mobile phone subscriptions grew at more than 10 percent YOY last month (India doesn't release retail sales data) </li>
<li>The rupee has been on a steady decline, making it super-competitive in the region: right now it's trading at 0.016 to the dollar</li>
<li>Industrial output is on the up and up</li>
<ul>
<li>? Last month, India was the only country in Asia with positive PMI growth, at 51.6, up from 51.0 in September </li>
<li>? In September, industrial production surpassed expectations: factory output jumped to 2.5 percent YOY, up from 0.5 percent YOY in August </li>
</ul>
<li>Inflation is dropping: at 5.5 percent in October, down from 6.5 percent in September, CPI was well below the government's 2016 target</li>
</ul>
India has made more progress than any other emerging market in lowering its current account deficit - and vulnerability to outflows - since the Fed shocked the markets last year by threatening to stop its bond-buying program. Right now the deficit is just 1 percent of GDP. 
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With the recent drop in global oil and gold prices - which, together, make up 45 percent of India's imports - researchers at Capital Economics predict India could be running a current account surplus over the coming months.
The Modi government has taken big steps toward reducing debt - cutting diesel subsidies by half, increasing taxes on diesel and petrol, and marketing its stakes in Coal India and the Oil and Natural Gas Corporation.
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Despite these efforts, India will probably miss its fiscal target (of 4.1 percent in F2015). That's due in part to a high base-line left behind by the previous administration.
But, according to researchers at Lombard Street Research, it might not be such a bad thing. The economy is running below capacity right now, and a little extra spending could help give it a boost.
So basically India's looking pretty good... but Modi's administration does have its critics. 
The new debt-reducing policies are definitely unpopular: in June, protestors around the country <a href="http://www.theguardian.com/world/2014/jul/07/india-railway-fare-rises-spark-protests">took to the streets</a> when the government raised train fares by 14.2 percent. Freight fares jumped 6.5 percent. 
(Riots are old news for the 64-year-old Prime Minister, who faced criticism as chief minister of Gujarat for allegedly condoning anti-Muslim violence in 2002. The U.S, UK, and EU boycotted him for a while, and today he's still widely regarded as a Hindu nationalist.)
<div class="KonaFilter image-container display-table"><div><div class="image on-image"></div></div></div>Now, Modi maintains a steady focus on the economy, which is not yet in the clear. 
GDP growth is sliding. Exports were down 5 percent YOY in October and GDP growth weakened to 5.3 percent last quarter from 5.7 percent in Q2. 
That's partly a result of slow global demand (hence wanting to boost domestic demand) and partly due to supply-side constraints, like a <a href="http://articles.economictimes.indiatimes.com/2014-07-14/news/51484976_1_coal-mines-power-minister-piyush-goyal-india">tight supply of coal</a>. 
Structural reforms are needed, but in the world's largest democracy, that will take time. Nobody's holding out for a big bang or sudden change.
But Modi supporters say he's got this.
The winter parliamentary session kicked off this week, and reforms in <a href="http://firstbiz.firstpost.com/economy/rbi-ready-to-give-banks-flexibility-to-restructure-stressed-loans-110130.html">finance</a>, <a href="http://firstbiz.firstpost.com/corporate/govt-plans-double-coal-india-production-2019-110124.html">infrastructure</a>, taxation, labor, and land acquisition will be top of the agenda.
Also this week, U.S. Trade Representative Michael Froman flew to Delhi for trade talks, and in January, President <a href="http://articles.economictimes.indiatimes.com/2014-11-23/news/56385217_1_pm-modi-strong-message-republic-day">Obama will come to visit</a> for India's Republic Day celebrations.
<div class="KonaFilter image-container display-table"><div><div class="image on-image"></div></div></div>It's a bit of a change since 2002, when the U.S. denied Modi entry after his alleged involvement in the Gujarat riots. But as other countries face economic woes, India is becoming an increasingly important business partner for America. 
Meanwhile, for India, weak export demand could be the biggest obstacle to economic ascent, so the U.S., a major buyer of India's goods, would play an important role in the country's success. 
So even if dreary global demand does pull India down, it very likely won't fall as far as everyone else. 
That would still be a victory.

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The year before and the year ahead

Amit Kapoor

Congress Upset With Lieutenant Governor For Letting Cornered Arvind Kejriwal Off The Hook

Times Of India

India Is The Last BRIC Standing

Portia Crowe