• Finally, budget making would have just commenced. Those who expect elections in the near term believe that this would be a populist budget. Others, looking at the current political configuration, expect the government to last its full term and expect the forthcoming budget will be the penultimate one.

Whatever be the case, the government must redeem its many unfulfilled promises. Announcing more populist schemes or a large provision for additional emoluments of public servants can cripple the fiscal health that has been nurtured carefully. There is ample evidence that new projects take time; the leads and lags are significant. The electoral gains from many populist measures to the party in office remain questionable. Completing the unfinished tax reform agenda, putting in place mechanisms to better monitor public outlays, and a number of small steps to improve the cost and competitiveness of the Indian economy will have a more lasting value.

Notwithstanding exogenous risks, 2008 can build on the economic momentum of 2007. Only time will tell if the government will rise to these challenges.

Meanwhile, here’s wishing my readers a very Happy New Year.