India Insight:Meetings in Delhi-cyclical headwinds,structural tailwinds

Working towards creating a foundation for sustainable growth: Thisweek we met with a few senior government officials in Delhi. The keytakeaway is that despite growth headwinds in the near term (investment cyclerecovery getting delayed, governments’ stretched balance sheets, banks’asset quality concerns, etc), the focus is on improving growth potential andcreating ample job opportunities for the growing working-age population in themedium term.

The government is trying to undertake structural reforms, including (a)passing of the GST Bill, (b) increasing infrastructure spending, especially witha focus on roads & highways, railways and ports, (c) attracting higher FDIflows, (d) promoting ease of doing business under the ‘Invest India’ initiative,(e) moving towards inflation targeting, and (f) developing smart cities to helpimprove the productivity dynamics and lay the foundation for sustainablegrowth.