EMBRACING UNCERTAINTY: INDIA IN AN INTERCONNECTED WORLD No man is an island, Entire of itself Every man is a piece of the continent, a part

of the main These lines are from a famous poem written by the legendary poet John Donne. If we look at our world today, we find that these lines provide a fitting description for the way economies function around the globe these days. Global interdependence is a defining feature of our era. No country can decide its destiny in isolation, India being no exception. Coupled with this is the fact that we live in uncertain times. In the nearly 6 years since the financial crisis happened, the international community continues to feel the aftershocks of the crisis. But the policy challenges are just as important in India, as they are anywhere else in the world. So what lies ahead for India? It has to pursue policies that foster internal and external balance. While keeping an eye on the new realities of a interconnected world, India has to look deep within itself as to where lie its shortcomings. In an interconnected world it is imperative that we send out the right signals to restore the worlds faith in our economy. This can be done by building strong foundations of institutional and structural reforms which help in realizing the full potential of our economy. Also, by utilizing our demographic dividend to develop new avenues of growth in areas like social media, analytics, environment, we can create a resilient economy which can weather global shocks and emerge out as a winner. VIEW FROM INDIA: ADDRESSING POSSIBLE GLOBAL SHOCKS THROUGH POLICIES From abroad, India fits comfortably into the category of countries that are doing well. Its growth is strong by advanced country standards. But it is going through a period of volatility. Bumpy recovery and skewed macroeconomic policy mix in advanced economies are complicating policymaking in India. The rupee weakened 1.6 percent last month and reached a record low on July 8 amid concern that reduced stimulus by the U.S. Federal Reserve will make it harder for India to fund its current-account deficit. The two-month outflow from stocks reached $2.8 billion, the most since the global financial crisis in November 2008, regulatory and exchange data compiled by Bloomberg show. We need to find out ways to build policy buffers to survive global headwinds. There is a need to consider tightening macro prudential measures in conjunction with monetary policy tightening. We have put greater emphasis on fiscal policy management. India also has to focus on fostering ties with other countries through implementing new trade and investment partnerships. BUILDING THE BEDROCK FOR A COMPETITIVE AND STABLE ECONOMY Change is never easy in any country, and sometimes the democratic process can make the process even more difficult. But in order to become a force to be reckoned with, India will have to take tough stances in its institutional and structural reform policies. Capital flows will follow growth opportunities. Manufacturing is a sector which has ability to substantially to generate employment for the countrys large and growing labor force, and help the economy become more competitive and grow at a robust pace. But to become the worlds manufacturing hub, we need substantial investments in infrastructure, structural policies aimed at fostering favorable business and investment regimes strengthening private investment, reform of goods and labor markets, improving tax and spending policies, and addressing rapid demographic shifts.

India is aware of its vast potential but the problem stems from this vast potential only. We have to take a long term view which involves investing in core social programslike education, health care and social protection systems. These measures protect the poor and vulnerable; reduce inequalities that could generate instability; build human capital; and create an enabling context for sustained growth.
THE NEW GROWTH COMPASS: CREATING A NICHE FOR INDIA /ACHIEVING GLOBAL SUCCESS IN AN INDIAN WAY

India has a strong global presence in the business process outsourcing and IT fields. But have to work towards achieving success in new avenues like digital and social media, analytics, environment and innovation management. According to NASSCOM, the Indian analytics industry is expected to see a growth rate of 25% in the coming years, making India the foremost force leading the analytics revolution. Developing sectors within the domestic markets could be an effective way t achieve global success. We have to leverage the demographic dividend and vast pool of educated young Indians for creating our niche as a knowledge economy which is indispensible to the world. A focused and calculated approach, therefore, is the perfect way to realize the dream of a stabilized economic growth with utilization of the maximum available potential.