A few years ago, when the global economy was witnessing slowing growth rates, India's engine was chugging along steadily, clocking growth rates of high single digits. There was in fact a brief period when stories like India's economy being decoupled from that of the world's made headlines.
Flash forward to the present, it turns out that, that was obviously not the case.
While India still continues to do better than most of the global economies in terms of growth rate, the growth estimates have been revised downwards by a substantial portion. A slew of factors and obstacles have come in the way as compared to what was envisaged. This especially at the time when the going was really good!
This 'going was really good period' we are referring is of about seven years ago. As highlighted by the Wall Street Journal - in an interview with Rajat Gupta for Mckinsey's Quarterly (the consulting firm's journal), Prime Minister Manmohan Singh had then termed the next five to ten years as crucial years for India. Long term sustainable growth rates envisaged back then stood at regions of about 7% to 8% - figures that seemed easily attainable. In today's scenario, these would be considered as ambitious targets, at least for the short to medium term.
A key item on the agenda (seven years ago) seemed to be moving workers away from agriculture. This seems to be a concern today as well - as highlighted by the PM in his speech to the National Development Council (NDC) recently. For moving people out of agriculture, more jobs need to be created in other sectors. Say for instance manufacturing. Manufacturing sector was considered to be an area of concern seven years ago. As put in his speech yesterday (to the NDC), the PM stated that growth in manufacturing should be at double digit levels. This, as you would know, is yet to happen. Another common aspect of both the incidents was the need for better quality infrastructure. The only difference is that while some progress seemed to have been made in 2005, today's large sized projects are failing to make progress.
Given that the government had its back against the wall - a slew of reforms were announced to revive the economy in recent times. A key one was the government allowing foreign direct investment in retail, an item that was on the agenda back in 2005 as well.
Will India revert back to the growth rates its desired growth rates and whether it will be able to sustain the same is anyone's guess. But given the recent positivity displayed by India Inc and investors, expectations of things improving and progressing seem higher than what they were for most part of the current year.