Shekhar Iyer

Some could be given an entire field of roses and only see the thorns. Others could be given a single weed and only see the wildflower in it, wrote famous author and blogger Amy Weatherly.

Perception is a key component of everything. So it is for the question of how the New Year will be for us.

Will our lives get better or worse? Will political cacophony drown us in despair or help us overcome our worst fears of riots, killings, and personal safety?

There's also the possibility that trouble mongers in our midst realise the futility of their doomsday prophecies and that the entire humankind -- of all religious hues and demographic entities -- is capable of higher dimensions and purposes.

With a stable government under Prime Minister Narendra Modi, we are living with conflicting political narratives. But the truth is that we will continue to work and live together as Indians or Bharatiyas.

Down in our hearts, we know that our religious and cultural differences are not written in stones though they may appear to be sometimes. In everyone's welfare are our welfare, yours and mine.

Elections may come and go. Our politicians will remain confused or confuse us in pursuit of ambitions.But the total of all our aspirations will continue to soar to new heights even though our fears may weigh us down. As we say goodbye to 2022, we may need to shed our fears first. Amidst our challenges, there is still a possibility for a change for the better.

After all, India started 2022 with hopes of a rebound in the global economy and pandemic fears seemed to end.

Our hopes were, however, shaken as Russian President Vladimir Putin invaded Ukraine, plunging Europe into a deep crisis since World War II.

Yet, despite the sharp slowdown in global growth and the energy crisis due to the Ukraine war, India has emerged as a standout nation.

We seemed to have handled the fallout of the Covid pandemic better, thanks to the government's largest vaccination drive.

Therefore, the latest estimates show that growth is likely to be around 7% for 2022-23, hopefully riding on the momentum of robust domestic demand. No doubt, our economy is recovering. Several indicators show India's growth is getting back on track.

Inflation, which had emerged as a major policy concern for India, now appears to be moderating - with the latest data on retail and wholesale price inflation showing a sharp fall.

That means the interest rate may not go up very steeply. Also, the Budget for 2023-24 to be presented by Finance Minister Nirmala Sitharaman in February, is likely to push growth and further shield the economy from global headwinds.

Will that mean more jobs being available to our youngsters? Perhaps, a strong yes! Many economists say 2023 should be a year of consolidation for India. This notwithstanding, unexpected global challenges may threaten India's rise as a powerful economic power. But we shall be able to overcome them because of sound leadership at the helm.

There is some fresh uncertainty because of the Covid surge in China. But, because India went for vaccines that proved to be a success compared to China's, there may not be another pandemic in India. The government too has taken precautionary measures against the backdrop of the fresh surge in China. Ultimately, our vaccination record is expected to hold us in good stead.

Yes, the talk of a global recession may cast a shadow on the country’s exports, which have already started losing momentum.

But there are still several positives. Our domestic demand remains robust. Our agriculture sector has withstood the Covid impact and looks very resilient.

The outlook for the Rabi crop is bright. Backed by the government's higher support prices, along with adequate water availability in reservoirs and climatic factors indicating a higher production of wheat. As said earlier, our domestic consumption has shown signs of a revival. In November, equity markets touched new highs, supported by a fresh pick-up in portfolio flows to India.

The fall in the prices of vegetables has helped to moderate inflation.

The Centre has also recorded a big jump in collections in both direct taxes and GST, which means a sustained recovery of the corporate sector.

There is also a change in the number of corporates having high levels of debt. Banks too are fixing their bad loans on their books. The corporate debt-to-GDP is said to be its lowest in nearly a decade and a half.

The government's productivity-linked incentive (PLI) scheme is offering an impetus to manufacturing. Some fresh investments are expected in renewables, electric vehicles, and battery technology.

This has also benefited some sectors like high-value-added pharma-formulation and vaccines. PLI has drawn foreign smartphone manufacturers and enabled Indian electronic and engineering items manufacturers who are in global value chains. Bank credit has spiked in double digits for eight months now, reflecting the rise in investment. India could be the land of opportunity when most multinational companies are looking at our country as an additional area for investment, apart from China.

That's because China is no longer interested in retaining its advantage in low-skilled, unskilled labour-intensive manufacturing such as textiles, shoes, leather, and ceramics. India can fill part of this vacuum.

This is not to say there are no negatives to bother about. Europe is India’s biggest export market. But the Ukraine war has brought it to its knees because of the fear of an energy crisis-driven downturn.

The US grapples with inflation pressure and there won''t be a let-up in the Fed’s rate hikes. India’s current account deficit increased to $3.6 billion, 4.4% of GDP. A depreciating rupee also leads to domestic inflation, as imported commodities and energy used for domestic manufacturing and services become costlier. To tame domestic inflation, the RBI has been increasing policy rates ― by 225 basis points since March.

However, much depends upon how long the Fed continues with the rate hike. The US economy, in particular the labour market, remains strong.

The World Bank has cut down its growth forecast for China to 2.7% this year from the 4.3% estimated in June. That makes it clear that the world’s second-largest economy is going into a sustained slump. So there is little doubt that the global economy will slow down sharply next year.

This means 2023 will see higher protectionism worldwide, and greater fervour for de-globalization. India will see challenges and hurdles to tapping exports as a driver for growth.

In India, manufacturing continues to be not so robust. Factory output, as measured by the Index of Industrial Production (IIP), came down to a 26-month low in the festive month of October. Core sector growth for October was just 0.1%, which is the lowest for 20 months.

Yes, there is still distress among the Micro, Small, and Medium Enterprises (MSME) firms, reflecting the fact that the bigger companies are doing far better than the smaller firms. We are told that one in every six loans disbursed under the Emergency Credit Line Guarantee Scheme launched as part of the Covid-19 relief package in May 2020 has turned bad in just 27 months, with the defaults mainly in the lower end of the loan bands (up to Rs 20 lakh).

As MSMEs employ a sizable section of the labour force, their continuing financial stress points may mean no expansion of the labour market.

Yet, 2022 showed it was a special year for India. Since 2014, India under the leadership of Modi has declared its ambitions to be a leading power. This is very different from the West, which perceives India as a balancing power to manage China’s rise.

India has also articulated its vision of a multipolar world, repeatedly at many forums. That is why India's entry into the club of Big-5 economies was not a small affair. As India was celebrating its 75th anniversary of independence from the British, it overtook the UK to become the fifth-largest economy in the world. Ten years ago, India was 11th in global economic rankings while the UK was 5th.

No doubt, India has emerged as the most resilient economy earning the status of fastest growing economy in the world. By achieving a GDP of $3.53 trillion this year, India has cleared the decks to become a $5 trillion economy by the mid-2020s.

As India chairs the G-20 summit in 2023, it has managed to guard its interests too-- during the Russia-Ukraine war despite pressure from the Western countries to join them in reprimanding Russia. It not only benefited from buying the discounted Russian oil but also strengthened its position as an independent pole. India stood vindicated when the Western powers continued to engage the country but on its own terms.

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Therefore, at the end of 2023, things may not turn out to be as bad as feared

(Shekhar Iyer is a veteran journalist formerly associated with Hindustan Times)