Not over yet

reason for immoderate cheer or an excuse to relax. Better-than-expected is not the same as good,or even adequate. Last year,in the fourth quarter,the economy grew at 8.6 per cent. A fall of 3 per cent in growth rates cannot but be noticed. Also,the composition of the growth tells an interesting story. Not only did exports continue to collapse,driven by lack of external demand,but manufacturing did terribly,contracting by 1.4 per cent. But services and agriculture performed more strongly,and the component of GDP that is the government’s expenditure went up by a whopping 22 per cent. In short,government-pushed stimulus is what has kept the Indian economy chugging along.

What does this mean for the future? First,it would be a grave error for the government to conclude that the economy has been given the impetus it needed and now it can take care of itself. The second lesson the government must avoid drawing is,in some ways,the opposite: it mustn’t believe that because a giant fiscal stimulus kept India’s head barely above water in the last quarter,there is no alternative to an identical stimulus being unveiled soon. Another set of figures must exercise their mind: the fiscal deficit.