The year 2015 will go down in history as one that laid the groundwork for the promised “acchhe din” (good times), with enough concrete indicators that the Indian economy is set for a bounce.A series of far reaching measures taken by the Narendra Modi government is slowly beginning to bear fruit. The most important of these is the decision to front load the government's capital expenditure, especially in the roads and highways, railways and rural infrastructure sectors.The roads & highways ministry, headed by Nitin Gadkari, has been the star performer. Several proactive measures to revive stalled projects, new and easier norms for financing and clearances and a strong focus on quick awards and active support have breathed new life into the sector that is now driving the uptick in the demand for cement, bitumen and real estate in Tier 2 and Tier 3 cities.Then, the quick and transparent auction of coal mines, following the cancellation of the allocations made by the previous UPA government, is already showing signs of reviving the sector. Investments have started flowing into the eastern states of Bihar and Jharkhand, where a majority of these mines are located, propelling the growth rates in these provinces to almost double the national average.“The government's bottom-up approach to growth is showing results,” a recent Credit Suisse report said.Finance Minister Arun Jaitley has said that every single step the government has taken has been in the same direction - of reviving the economy and putting it on a higher growth trajectory.Devolution of financial powers to the state by implementing the recommendations of the financial commission and restructuring the Planning Commission into a Niti Ayog were among some of the other major steps.
At the same time, the government has taken care to push financial inclusion. It has introduced three insurance and pension schemes to provide social security in a country that provides no safety net for the poor and the needy, along with the previously launched Jan Dhan Scheme, promise to improve the lives of millions of poor Indians. Taking cognisance of the fact that 93 per cent of the Indian workforce of 480 million work in the unorganised sector, which also produces almost half the country's GDP, the government launched Mudra Bank, with a corpus of $3000 million (Rs 20,000 crore) to provide finance to small and micro enterprises that till then had no formal access to capital.This is expected to create millions of jobs in semi-urban and rural areas and absorb a large part of the army of 12-15 million youngsters who join the workforce every year.There was also a lot that went wrong during the year. The Monsoon failed for the second successive year leading to droughts in several states.But record stocks of foodgrains and timely steps by the central and state governments kept food prices in check across large parts of the country. The exceptions were the prices of onions, tomatoes and pulses, which peaked, causings some hardship to the common man.With inflation remaining in check, helped greatly by falling global crude prices, Reserve Bank of India governor Raghuram Rajan decided to reverse his hawkish stance on monetary policy and cut the key policy rate, on which banks benchmark their deposit and lending rates, in four tranches by a cumulative 125 basis points (100 basis points = 1 percentage point).Banks, however, have been niggardly in passing on the benefit of lower rates to customers, cutting their lending rates by 60-75 basis points. This was because most banks, especially in the public sector, are grappling with massive nonperforming assets (industry jargon for loans which have not yielded any interest income for two or more quarters).
This weight of NPAs is also coming in the way of banks lending money to the corporate sector, creating a roadblock in the government's plan to kickstart the investment cycle.To nurse the Indian banking system back to good health, the government launched Indradhanush, a sevenpronged programme to help banks overcome the NPA problem.Politically, the year was a bit of an anti-climax for the BJP, which began 2015 with the glow of its 2014 victories in the Lok Sabha and Assembly elections still burning bright. It received a drubbing in both Delhi and Bihar, the only two assembly elections held during the year.The Congress and other opposition parties also managed to disrupt the Monsoon Session of Parliament and stall the government's legislative agenda, which included the passage of the land bill and the GST Bill, among several other laws.The Winter Session of Parliament is now on. There are indications that the government and the opposition may be able to narrow down their differences on the GST Bill. If the bill does pass through the Rajya Sabha and the states are able to complete the residual formalities, India might yet get the law that will stitch its 30 separate markets into one common market.If that happens, it could add up to 200 basis points to GDP growth and help usher in the “acchhe din” whose contours are now only faintly visible on the horizon.Some facts and figures of 2015:Economy