Non-government actors are more forthcoming.  However, one should dispose of ICRIER first — a study quoted more and read less.  ICRIER never said 3.9 per cent for all of 2009-10.  That was a figure for the first half of the year, since the global shock was superimposed on slowdown caused by monetary tightening.  ICRIER apart, we have forecasts (Assocham, Allianz, Morgan Stanley, Citibank, Goldman Sachs, Merrill Lynch, Nomura, World Bank, IMF) ranging between 5.3 per cent and 6.5 per cent.  There is a 3.5 per cent from First Global floating around, but it’s not clear what this is based on and whether it is for the full financial year. If you err on the side of 6.5 per cent this financial year, you err on the side of 5.5 per cent the next financial. And if you err on the side of 7 per cent this financial year, you err on the side of 6.5 per cent the next financial. 0.5 to 1 per cent is shaved off from whatever is believed to be trend growth, after allowing for slowdown resulting from monetary tightening. Counter-cyclical options through fiscal policy are limited.  Fiscal policy measures, including those announced on January 2, have limited impact and are quantitatively insignificant. Life would have been different had fiscal reforms been introduced in years when the going was good.

State deficits declined because of good growth and buoyant tax revenue. With growth down, gross state-level fiscal deficit will increase to around 3 per cent of GDP. With unbudgeted items (debt waiver, pay commission, NREGA) and off-budget items (oil, food, fertiliser), the Centre’s contribution to deficit (not just the technical fiscal deficit) will be 7.5 per cent of GDP, if not 8 per cent.  After May 2004, a long list of structural reforms was on the agenda.  With little accomplished in 57 months, what does one expect in the remaining three? (The elephant, an image for the Indian economy, and perhaps government, has a gestation period of 22 months.) This reduces counter-cyclical possibilities to monetary loosening alone and the January-2 dose can’t possibly be the last.  All takes on inflation are based on point-to-point WPI.  WPI-based point-to-point inflation was high from January to April 2007. Therefore, WPI-based inflation will be low for next few months (not to forget indirect tax and petro product price cuts) and by this indicator, will be down to less than 5 per cent by the time elections are announced. Hence, a further infusion of liquidity and interest rate cuts are eminently doable. When will these lead to investment and consumption expenditure revival? With political uncertainty thrown in, that’s unlikely to occur before Q3 of 2009-10, with a longer time-lag for the former than the latter. There is an album titled “Doom, Gloom, Heartache, and Whiskey”. India’s doom and gloom may have been exaggerated. But there is plenty of heartache and whiskey won’t flow until September 2009.

... contd.