To keep our economy and our politics vibrant, we will need to think very hard about several looming questions. The first question is on what happens to the economy. The effects of the global crisis on India will only get more severe in the coming year. Speeding up reform and boosting investment have never been more crucial. One critical lesson from the recent past: structural reforms during a slowdown pay off big. Reforms undertaken during the 1997-2000 slowdown helped propel the post-2003 nine per cent growth phase. The economy cannot be allowed to sputter at this time; not only will the political cost be incalculable, but the world is watching how we recover, and we need to keep capital flowing in.

On a separate front, we also have to forge a productive approach to the Pakistan conundrum and how best to extract real commitment from our recalcitrant neighbour. We have to exercise all our diplomatic wiles and enlist friends and allies to step up pressure. This means India’s diplomacy with America will be vital in 2009 for more than the obvious reasons. Obama’s America will be one of 2009’s most exciting stories but for India, the president-elect will have to deliver on a very prosaic front. He will need to tell a state apparatus in Pakistan comfortable with terrorism that that option is over. Because the world should not think in 2009 that memories of the Mumbai attack will fade, that India will go back to status quo ante.

... contd.