The first test will come with the February-end Budget, much hyped in advance, on its path-breaking structural and fiscal reforms, and well-designed to facilitate hassle-free entry for foreign investors to “make in India” and sell here and abroad, within a stable framework of tax and other business-friendly policies. At home, its ordinance route of governance is already frowned upon and opposition parties are increasingly wary of its approaches to land and labour reforms.

Mr Modi had no doubt strong words of comfort from assembled world leaders including the World Bank President Mr Jim Yong Kim, who reaffirmed the Bank Group’s commitment to help create a “vibrant India”, an India that shares its prosperity “more broadly” which is essential to ending extreme poverty by 2030, a universal goal set by the World Bank.

In other words, Mr Kim has spoken of the “inclusive development” model, which is currently less visible in the Modi Government’s preoccupations with a strategy of growth with foreign investments. Finance Minister Mr Arun Jaitley has talked of effective decision-making by Government with a “dynamic and decisive” Prime Minister at the helm. Government, in his view, must come out of “traditional mindsets of pro-business or pro-poor” and focus on “comprehensive development”, whatever it may mean.

The Modi Government has no doubt been lauded by Mr Kim for putting in place “the building blocks” for more rapid growth, streamlining the regulatory structure, and for a common market, making it easier to do business in India. With elimination of diesel subsidies, he said, investments in human capital would improve labour.

The New Year has certainly been ushering in some favourable winds for the Modi Government, which it could take advantage of, to reboot the growth engine and project a more inclusive and sustainable development strategy, once the brand-building summits are out of the way. The World Bank, according to its President, has projected growth of 6.4 per cent in fiscal 2015 and it could rise to 7 per cent in the following two years

The global economic scenario, from which India cannot divorce itself in policy-making or in becoming internationally competitive, is also favourable for oil-importing countries, with the sharp decline in oil prices since mid-2014. This created some space for Government in the current year to accelerate diesel price deregulation and significantly lowering subsidy levels, even as it continued to struggle to peg the fiscal deficit at the targeted 4.1 per cent of GDP.

Feverish efforts are on to gobble resources through auctions in coal and telecom sectors and disinvestments in public enterprises in the coming weeks in order to balance the budgetary sums and present what may be viewed as a credible image for fiscal management, an essential pre-requisite both for foreign investors and international credit rating agencies.

Citing positive factors in the global economy in 2015, the World Bank in its latest Global Economic Prospects, says the decline in oil as well as other commodity prices is expected to reduce inflationary pressures for countries. The slump in oil prices is projected to continue well into 2015 contributing to global growth with significant income shifts from oil-exporting to importing countries.

According to the International Institution of Finance Monitor, amid robust supplies and demand weakness and with growth divergence across countries including G-3 (USA, surplus in oil, EU and Japan), a significant price upturn will not materialise until well into 2016. But IIF says the world economy has entered a 'volatile new year'.

On India, the World Bank’s flagship publication says with “credible policy frameworks and reform-oriented Government”, India would adjust more easily to tightening or volatile global financial conditions than countries with limited policy buffers and weakened growth prospects. Implementation of structural reforms in India would raise confidence and encourage personal investment and consumption.

India has announced and begun to implement re-forms, with a focus on streamlining administrative processes and easing business registration and licensing requirements. In addition, it has begun to address long-standing weaknesses in the energy sector, by introducing market-based diesel pricing, partially deregulating gas prices, and taking steps towards increased private sector participation in the coal sector, the Bank report said.

Current account deficit and elevated inflation – both persistent vulnerabilities – have declined considerably. On monetary policy, whatever the pressures being exercised on RBI for rate cuts by business as well as Government, the World Bank says central bankers everywhere have to weigh monetary measures to support growth against those needed to stabilize inflation.

There is a qualitative change for the better in industry, especially manufacture, with growth at an impressive 3.8 per cent in November and in April-November 2014 industry grew by 2.2 per cent over 0.1 per cent in the corresponding period of 2013. A depressing number would have added to the chorus for policy easing.

CPI, as anticipated in RBI’s December policy statement, has moved up to 5 per cent in December from 4.38 per cent in November. This does not, however, rule out RBI, following the disinflationary path, adhering to its intention to begin a rate cut in the first quarter,

The World Bank has projected better global growth at 3.0 per cent in 2015 from 2.6 per cent in 2014, after years of disappointing outturns, and this is due chiefly to the US economy now growing above potential and strong recovery in many emerging economies.US growth in 2015 is projected at 3.2 per cent, while EU and Japan are yet to overcome legacies of the financial crisis of 2008. The lingering slow recovery is intertwined with structural bottlenecks.

For China, growth is projected to decline from 7.4 per cent in 2014 to 7.1 in 2015 and 7 per cent in 2016, a path of gradual deceleration. But, the Bank also cautions that despite sufficient policy buffers, downturn in China could turn into a “disorderly unwinding of financial vulnerabilities with considerable implications for global economy”.

On India, the Bank says growth is expected to rise steadily to 7 per cent as reforms begin to yield productivity gains and this would also benefit other countries in the South Asian region which receive remittances from India.

Political tensions and a difficult security situation would continue to weigh on economic activity in Pakistan while in Bangladesh continued reform efforts and robust remittances have helped and should continue to promote domestic demand and investment more generally. Growth projections for these two countries in 2015 are 4.6 per cent and 6.2 per cent respectively. (IPA Service)