Rediff.com
Print this article

Will the New Year bring cheer to the economy?

December 12, 2013 09:57 IST
New York's World Trade Center

The US economy will once again demonstrate its resilience and flexibility and grow around three per cent despite extremely fractious domestic politics over fiscal and other policies, says Shankar Acharya.

Yes, it’s that time of year when thoughts turn to what the New Year might bring. 

Despite George Eliot’s admonition, “among all forms of mistake, prophecy is the most gratuitous”, here are a few speculations about 2014.

World: Economic/financial

Will the New Year bring cheer to the economy?

December 12, 2013 09:57 IST
A man rides Toyota Motor's one-seater 'i-unit' vehicle in Nagoya, Japan.

Will the New Year bring cheer to the economy?

December 12, 2013 09:57 IST

Will the New Year bring cheer to the economy?

December 12, 2013 09:57 IST
New York's Empire State building

World: Political/security

In contrast to this fairly sanguine outlook for the world economy, the prospects for global political and security developments are much more mixed.

Will the New Year bring cheer to the economy?

December 12, 2013 09:57 IST

India: Political/security

Three days after the election results to five state Assemblies, politics is the flavour of the season. This “semi-final”, to use a popular term, has clearly been won by the Bharatiya Janata Party (BJP). And the Aam Aadmi Party (AAP) has made a spectacular debut in Delhi. What of the future?

Will the New Year bring cheer to the economy?

December 12, 2013 09:57 IST

India: Economic/financial

By the time a new government assumes office, almost half the calendar year will already be over.

The government will inherit a weak economy beset with multiple problems: slow growth (around five per cent annually), high consumer price inflation (about 10 per cent), high interest rates, lacklustre investment, large central government fiscal deficits (about six per cent of gross domestic product, or GDP), continuing pressures on external finances and the rupee (Rs 65-70 per US dollar), the rising fiscal claims of already legislated entitlement programmes, public sector banks with poor loan portfolios, serious infrastructure bottlenecks and grave and growing problems of unemployment and job scarcity — in short, “an in-tray from hell”.

Click NEXT to read more...

Will the New Year bring cheer to the economy?

December 12, 2013 09:57 IST

Even with serious efforts by the new government, the likely outcomes for 2014-15 in key dimensions may be as follows:

If correct, these are not great numbers, but they would be an improvement on 2013-14. The real test will come in securing further advances in the years ahead.

Happy New Year!

(The writer is honorary professor at Icrier and former chief economic adviser to the Government of India. Views are personal.)

Source: