The new provision, now withdrawn, designed to take away RBI jurisdiction over the debt market, should not have been included in the Finance Bill, in the first instance. This became an addition to other frictions between Government and the central bank. Mr Jaitley now says a new road-map would be prepared, in consultation with RBI, separating the debt management function and the market infrastructure and having a unified financial market.

This has to be done through legislation, as the opposition pointed out. In the two months since the presentation of Mr Jaitley’s much-touted reform budget, there are not many signs of any significant turnaround for the economy which the Modi Government has claimed had been lifted out of the 'morass' left over by the Congress-led UPA Government.

Apart from macro-economic management issues, new strains also emerged with past tax claims (MAT) slapped on FIIs, who turned jittery and cautious about new equity purchases after some sell-offs. The stock market has mostly been in bear territory during April. Government has made it clear that the abolition of MAT in the budget would only be prospective from April 1,2015 and past dues have to be made good..

FIIs and Government, however, agreed on seeking fast-tracking of the dispute raised over the tax, now in the Supreme Court. Meanwhile, Mr Jaitley has provided in the Finance Bill that there would be no levy of MAT on foreign portfolio investors parking funds in bonds, private equity funds as well as MNCs earning royalty, that face levies which are lower than the 20 per cent MAT. This will be prospective from the current fiscal year. The Finance Minister has also eased MAT rules for real estate and infrastructure investment trusts.

The macro-economic scene is no less challenging that it was a year ago. 2014/15 has turned out to be no better in sectoral performances over the previous year under UPA. Take any of the key variables -manufacturing, core sector industries, exports, credit growth, corporate performance, all uniformly dismal.

Mr Jaitley's tasks are thus cut out, outside the arena of reform legislation, notably GST, in bringing into fruition at least those projects which have been cleared from all angles, but these lack fresh funding. What was hitherto considered as a huge bottleneck, hundreds of projects held up for multiple clearances, still remain baffling even though government claims it has expedited clearances from environmental and other angles for a large number of them.

But most of these are stalled for funding from banks which are themselves stressed with rising bad loans (NPAs). These had arisen with initially-lended projects, mainly infrastructure, not taking off due to absence of fuel linkage or environment clearance and in some cases land acquisition. It may be facile for Prime Minister Narendra Modi or Mr Jaitley to blame it all on 2013 land acquisition law, which is now sought to be drastically amended through ordinances. But after all the country-wide farmer agitation, will the Modi Government bite the bullet?

The growth outlook for the current year also is not as promising as had been hoped for earlier, not merely because of the political challenges that the Modi Government has run into over its own land acquisition legislation. There are greater concerns about ability to put through reforms to bridge infrastructure gaps with public and private investments and making India globally competitive.

The World Bank in its most recent report on India notes that growth has accelerated (going by the revised CSO data for 2014/15), inflation has declined, the current account deficit has narrowed, and external reserves have increased. GDP growth (at market prices) is projected at 7.2 percent in fiscal 2015 and 7.5 percent in 2015-16. But all this is subject to both external and domestic risks.

The country is likely to experience a less than robust monsoon this year and it would not only retard growth significantly but add to rural distress and reverse the declining trend in consumer price inflation. Government has no doubt been taking steps to meet any contingency but growth would become subdued.

Externally, how long India would continue to benefit from low oil prices, which had a substantial beneficial impact on economy in 2014/15, remains an uncertainty. A tightening of US monetary policy can also a disruptive impact on India’s exchange rate and financial markets, according to the World Bank which says, despite reserve build-up (340 billion dollars by mid-April) the risk warrants vigilance.

The US Fed has for the present deferred a rate increase till the latter part of the year in view of mixed signs that US economy exhibit, with growth slowing to 0.2 per cent in the first quarter of 2015. Global growth overall will remain constrained by the lack of vigour in recovery in advanced economies, especially USA, and the slowdown in China and other countries of trade interest to India.

India has announced its most ambitious goals and reform measures but, as the Bank points out, boosting private investment would be crucial to overcome the infrastructure deficit. But the debt overhang in corporate balance sheets, which is also applicable to public sector banks, would be a major problem. Government hardly looks fiscally comfortable as of now to undertake recapitalization of the requisite magnitude, even if some measures are under way to strengthen the balance sheets of public sector banks.

Despite all the attractions of investment opportunities India holds out, as made widely known in the Prime Minister’s visits abroad, the international community still looks for tangible progress on sustainable reforms on making it easier to do business as well as domestic corporate investment revival. Likewise, international rating agencies also stipulate conducive factors to emerge before they could do a credit upgrade, sought by India. (IPA Service)