How is the Indian economy really doing?

All the heady optimism has overlooked the vulnerable state of the macro-economy. Caution, not complacency, is the more appropriate sentiment for now

A cross-section of opinion, from captains of Indian industry to the Managing Director of the IMF, has been gushing praise for India. For them, India is one of the few bright spots in the global economy, with double-digit GDP growth and a prospect of taking over as the next China.

What should one make of these claims? Is the Indian economy truly booming? The short answer is that the latest data flatters to deceive. The economy is out of the ICU, but its health remains fragile and still needs the doctor’s attention.

Assessing the economy today requires accounting for two