Fundamental motto adopted in the economic survey is wiping every tear from

every eye which the government aims by reducing vulnerability for the poor and
vulnerable, while affording opportunities for the young middle class. It aims to
adopt a posture of fiscal discipline and credible medium term fiscal framework to
create a strong macroeconomic foundation. In the pre election period it was
anticipated that there would be big bang reforms instead a path of
incrementalism is being followed. The underlying philosophy being that
incrementalism will cumulate over time to big bang reforms.
Fiscal policyGovernment aims to boost public investment in the short run while maintaining
expenditure control and switching from consumption to investment.
The government aims to lower fiscal deficit to 3% of GDP in the medium term as
planned in FRBM act 2012 to keep sufficient fiscal space to insure against future
shocks. It aims to limit borrowing for only capital formation reversing earlier
trends.
The fourteenth finance commission recommendations on transfer of resources to
states has been accepted by the government and will thus lead to enhancement
of share of central pool that states receive to 42 percent from 32 percent.
Greater devolution of finances to states and local bodies envisaged will put
approximately 5.3 lakh crore of period 2015-2020.
The Goods and services tax although stalled in parliament and undergoing
negotiations if passed will boost indias competitiveness and also increase
compliance.

Inflation
Consumer price inflation has declined to 5 % in February 2015 from 5.4 percent
in October 2015 with WPI index at 3.8% .
External SectorThe current account deficit has declined to 1.2% of GDP and FOREX reserves
have risen to 352.1 billion $. The rupee is now well positioned to absorb volatility
from U.S. Federal Reserve actions to normalize monetary policy. India still faces
three more significant threats mainly from a greek exit from the Eurozone , spike
in oil prices due to geopolitical issues and a deteriorating international trade
environment.
Corporate sector
Private investment is weak due to weak profitability and over indebtedness of
indian corporate sector . Interest coverage ratios of less than 1 and increasing
debt to equity ratios of the top 500 non-financial firms has created excess
leverage in the system. Weak institutions related to bankruptcy has lead to
persistence of stalled projects which has been around 7-8 percent in the last four
years. The PPP model in infrastructure needs a revamp by elongating payment
schedules for viable commercial projects. Many public sector banks have NPAs
on their balance sheet dragging them down . Lending in a situation of NPAs has
aggravated risk aversion in the system.

Political environment
Narendra Modi of the Bhartiya Janta Party was elected with a majority in the
2014 lok sabha elections with 282 seats in the lower house but BJP along with its
allies in the National Democratic Alliance control only 59 seats which is creating
problems for the ruling party as it is not able to pass key legislations like the GST
.
Technology environment