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India’s Fiscal Fortune

Indian Prime Minister Narendra Modi's government must be feeling lucky. The decline in world commodity prices, led by crude oil, has made managing the national budget easier – and now, after the Central Statistics Office revised its methodology for calculating GDP data, that task has become easier still.

CAMBRIDGE – Indian Prime Minister Narendra Modi's government must be feeling lucky. The decline in world commodity prices, led by crude oil, has made managing the national budget easier. And now, after the Central Statistics Office revised its methodology for calculating GDP data, that task has become easier still. According to the CSO, as a result of the methodological change, annual output growth in the second quarter of 2014 stood at 8.2%, up sharply from the original estimate of 5.3%.

Based on the revised GDP figures, India is expected to average 7.4% growth in the fiscal year ending March 2015. Moreover, the country is projected to grow at an 8-8.5% rate in the next fiscal year. No budget changes could generate such a marked, cost-free acceleration in growth. It is fair to say that the usually staid statistics department stole the thunder from this year's budget.

Nonetheless, Finance Minister Arun Jaitley's budget succeeds on several fronts – not least in its alignment of vision and implementation. Specifically, it advances the government's vision of a pro-growth agenda that enhances the ease of doing business in India, while targeting better delivery mechanisms for welfare schemes.

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