The best thing about 2013, on the face of it, is that it is over. Yet, for all its problems, it was a year in which a lot got done to prepare India for 2014 under, hopefully, a more decisive political leadership. To be sure, you had the tired and cynical political class bringing in one bad Bill after another populist onethe land Act and the food security one, for instance. But though he mouthed the usual inanities about reforming ration shops while forgetting about the ambitious and well-executed Aadhaar project, the election-stung Rahul Gandhi has been forced to talk about growth instead of vacuous inclusion and announced big changes in the APMC Acthe even got the environment minister changed though, till the voters rejected populism in Rajasthan and opted for growth in Madhya Pradesh and Chhattisgarh, he found no problem with her work.
Globally, with this likely to be the USs best year in a decade, Europe looking ready to just about crawl out of recession and both China and Japan looking better, Indias export story looks better. Though no one is looking at more than 5.5-6% growth in 2014 under even the most decisive political leadership given the thin project pipeline and tattered bank and corporate balance sheets, its the below-the-hood changes that are important. With crores of Indians on the cusp, between poverty and lower middle class, between lower and upper middle class, between rural and urban India, even a small growth is enough to push them up, to give a decent boost to consumptionwhich is why consumer-facing companies with strong rural arms like HUL, Hero and Maruti are reporting good results in all the economic gloom. To the extent there are reforms, such as those in the oil or telecom sectors, these push the growth envelope that much more.
There is then what our page 1 columnist Nandan Nilekani calls the network effect. At 875 million mobile phones, 140-200 million mobile internet users or 510 million Aadhaar-numbers, there is a sufficient consumer base for entrepreneurs to develop special apps formobile ATMs, for instance, to transfer money in rural areasand that, in turn, boosts productivity which, at the end of the day, is what GDP growth is all about. After years of selling made-in-China smartphones that helped them cement their leadership positions in the Indian market, firms like Micromax are set to manufacture these phones in India in 2014. That has to count for something.