India's reform agenda has so far been one of largely opening up the economy for FDI. Foreign investors look for improvements in infrastructure before committing funds. Other domestic policy measures/intentions have not impacted on growth so far. Indeed the World Bank's global index for Doing Business 2017 ranks India at 130, the lowest of the five BRICS grouping against Mr Modi's desire to raise it to 50 within a year or two. Nor the global rating agencies willing to upgrade India's credit rating at present until structural reforms (land, labour and GST) begin to take hold.
The Prime Minister's mantra of maximum governance and minimum government has been severely tested in the manner of his handling the upsurge of social eruptions from time to time. Also, Modi may still be on a learning curve the way he has dealt with some of the foreign policy issues, notably in relations with Pakistan. Was he as impetuous in writing off NAM, a group of developing nations, which has traditionally looked to India for guidance, as his abrupt dissolution of the Planning Commission? Now, SAARC also looks shrunken in the aftermath of terror attack on Uri (Kashmir) from Pak-held part of J and K.
Meanwhile, the Modi aura is sought to be spread everywhere with his mantra of development and he campaigns gallantly in state after state for consolidation of ruling BJP's hold over the entire country. India's ‘surgical strikes’ on terror pads in Pak-occupied Kashmir are among BJP talking points highlighting Modi leadership, especially in UP which goes to poll early in 2017. There are clear trends of the Modi government gradually moving towards greater centralisation and efforts are on to bring states to fall in line with whatever policies and programmes New Delhi lays down - under the garb of cooperative federalism.
Prime Minister Modi would like states to advance their budgets, as the Union Budget for 2017 - 18, to be presented by 1 February. This would, according to him, help in "speedier implementation of projects and programmes" being provided for. The Budget for 2017-18 being advanced would incorporate railway finances as well,making the country's largest public undertaking even less accountable than at present.
Irrespective of whether GST could be operationalised on 1 April, 2017 as Finance Minister Arun Jaitley is insisting on or not, the budgetary exercises under way assume a larger defence outlay to raise the level of modernisation of armed forces to cope with a not assuredly peaceful environment in India's neighbourhood.
A fairly good monsoon holds out prospects of farm improvement in fiscal 2017 but growth in 2017-18 may at best hit 8 per cent if there are signs of global recovery and trade flows recover from this year's less than 2 per cent in volume growth.
Overall, as 2017 opens, India faces geater challenges in stimulating growth and investments at home while Prime Minister Modi would be called upon to navigate through geo-politically treacherous waters. The harsh realities to be faced are not merely with the ever-hostile Pakistan emitting belligerent noises but,even more, with our large neighbour across the Himalayas, China, aggressively posturing for supremacy all over the Asia-Pacific region.