But the road to economic progress this year will not be smooth for the Modi Government, which has got itself enmeshed into a range of controversies, social and political, also bringing into question issues of transparency of governance without taint the Prime Minister Modi had promised so much in his election rhetoric. And these could reverberate through the Monsoon Session of Parliament in July-August.

The Congress in the opposition has taken the lead in charging some of the BJP Government leaders with having had dealings tantamount to corruption with the former IPL cricket czar Lalit Modi, currently a fugitive in London. It called for not only the resignation of External Affairs Minister Ms. Sushma Swaraj but more pointedly of Rajasthan Chief Minister Ms. Vasundhara Raje, on the basis of revelations from Mr Lalit Modi himself.

While some of the BJP Ministers at the Centre have tried to defend both, dismissing any charge of corruption involvement, Prime Minister Modi has maintained stoic silence for weeks presumably for the noise to die down. This may be a shrewd way to keep himself above the din, whatever the damage to credibility for his party of governance.

After all, Mr Modi with all the power to himself, is more focussed on further electoral triumphs in Bihar (October) as well as other states going to polls over the next two years that would enable him to re-write India's history to unveil a new Hindutva era. With such more ambitious longer-term goals, Mr Modi may prefer to be more discreet. But it cannot last for ever.

By indifference, the Prime Minister Modi will be running into a danger of being regarded no better than as one who renged on a promise of corruption-free governance. His party (BJP) would then be treated as bad or even worse than the Congress, whom Mr Modi vilified to the utmost in his year-long election campaign. And all the dreams he had created in millions of people with aspirations would get vaporized. Already, some disenchantment had set in.

Much of the difficulty that the Modi Government has run into was avoidable but for the streaks of arrogance on display and majoritarian assertions of several BJP leaders at the helm. Mr Modi himself is no exception judging from his posturings on many occasions, and often he sounded even more contemptuous of Congress, given his goal of 'Congress-mukt Bharat', than some of his senior partymen.

At no time, the Prime Minister seems to have made an effort to get leaders of parties together in consensus-building exercises over some of the more controversial legislative proposals - whether on land, labour or GST - and his Ministers rattled about joint session of Parliament to overcome all opposition to its reform plans. He would rather prefer to work silently to cut Congress to size in the Rajya Sabha.

By such attitude, the major problem of land acquisition was allowed to become one of countrywide dimension. Mr Modi belatedly recognised he was being viewed as anti-farmer and pro-rich. It is now recognised abroad that there are limitations even for the Modi Government which had come to power with a huge backing of the electorate and created political certainty in India.

It is against this background that Finance Minister Mr Arun Jaitley had gone on a ten-day visit to United States to put the case of a Government committed to reforms and helping to doing business in India easier. And he found that investors expectations far exceeded what his Government had attempted or intended to do.

At home, Mr. Jaitley wrestled with tax issues troubling the foreign investors. His repeated reaffirmations of Government's commitment to a simple and stable and non-adversarial tax regime had only limited acceptability. He returned, not so much with greater promise of investment flows as with conviction that there was still much work to be done at home. Hopefully, he told investors, agricultural prospects would be better in 2015/16 and help improve overall growth outlook. The manufacturing sector had also turned the corner.

Recent trends no doubt project improving macro-economic stability. Government finances under greater control to achieve fiscal deficit target, whatever the negative impact on social sectors of the spending cuts. The current account deficit effectively controlled since 2013/14 has narrowed and is manageable with the reserve cushion. Reserves stood at 355 billion dollars by June 19.

The loss of export momentum in 2014/15 with a toll on output and jobs continued into early months of current fiscal, but a larger decline in our imports, pointing to domestic demand slackness, keeps current account deficit low to be easily managed with capital flows. The outlook for exports is still bleak despite the rupee depreciating in recent months as contraction in global demand has not lifted.

Global economy is ending the first half of 2015 with a mixed bag, first quarter contraction in US followed by some pick up in consumer spending subsequently, EU started looking better, fuelled by quantitative easing and Japan is experimenting with new reforms. Concerns on China's growth and financial stabilisation are again upfront.

On June 28, China cut interest rates for the fourth time in seven months and also the reserve ratio in the hope 'forceful easing' could stabilise the market and shore up growth. The lending rate has been cut to 4.85 per cent. On the fiscal side, with fall in revenues in the first five months China would have difficulty in meeting 2015 budget targets.

India aims to grow by around 8 per cent in the current year but most global and other projections point to a recovery at or little below 7.5 per cent, though higher than China's 7 per cent target. But India's growth, to rise above its current below-potential performance, is also linked up with progress on what Government does on faster project clearances and land and labour reforms.

With severe stress in the banking system and corporate finances, a strong revival of investments in the economy would remain elusive. How far Government is able to step in with public investment to trigger allround activity is still a moot question, Mr Arun Jaitley's budget promise notwithstanding.

Growth impeding factors, as RBI points out, include falling profit margins and decreasing debt repayment capabilities of the corporate sector. Whatever the monetary policy stance in US later this year, India is better prepared to deal with any volatility, and the stronger macroeconomic fundamentals provide 'a reasonable degree of resilience to Indian financial system in the event of spillover effects' from global factors. (IPA Service)