ABSTRACT
The Indian economy has slowed since late 2010. It is a matter of acute disappointment. Three phases characterised the post-1991 reform era. The first was up to 1996, when the economy seemed to bear the promised fruits of reform with three years averaging 7.2 per cent growth, strength on trade and external payments front and fiscal consolidation. However, India’s corporate manufacturing sector which had been nurtured on a diet of controls and protection overreached in the early years of liberalisation and got into a slew of problems that took years to resolve. To their credit they emerged from the restructuring process much stronger. The Asian Currency Crisis and internal fiscal problems were additional factors that forced several years of consolidation upon us during the National Democratic Alliance regime (1998–2004). This was the second phase. By 2003, much of this restructuring of corporate businesses and their balance sheets were over, bank balance sheets were much stronger, and fiscal consolidation had restarted. Growth was modest, external accounts stronger, and prices stable.
