A year ago, finance minister Arun Jaitley tabled an Economic Survey that confidently said the Indian economy was in a sweet spot despite global troubles. Economic recovery was getting stronger. Deficits were shrinking.
The report written by his economic advisers this year has a more muted message, even as it reiterates that India is a haven of stability in a volatile world. But there is a subtle warning that Indian growth will be seriously affected if the world economy slips into a crisis. It also talks of a need to recalibrate expectations.
The change is understandable. The past year has provided a reality check to Indian policymakers. Recovery has been uneven, banking stress is now out in the open and public finances are still under pressure. There is still a call for expansionary policy—but that has been tempered with a warning that fiscal policy needs to maintain credibility.
The finance minister has to negotiate these currents. How he does so will be revealed in his new budget on Monday.