On the face of it, 2015 has been a decent year for the Indian economy. Admittedly, activity indicators are pointing to a slow and bumpy recovery, but conditions have undoubtedly improved following three years of tepid economic growth. Meanwhile, inflation has remained anchored, allowing the RBI to lower interest rates by 125bp this year. In addition, India’s external position has continued to strengthen, leaving the economy well-placed to withstand the onset of Fed tightening.
But while the near-term picture looks relatively good, progress on the government’s reform agenda has been disappointingly slow over the past year. In particular, there appears to have been very little appetite among policymakers for much-needed labour market reform. Meanwhile, the passage of the Good and Services Tax and amendments to land acquisition laws continue to be delayed in parliament. Looking ahead, with a number of important state elections due to take place in the next six months, prospects for wide-ranging reform in the first half of 2016 look slim too.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services