Jaitley's dilemma shows why the India of Modi's dreams is still a long way off

Finance Minister Arun Jaitley faces conflicting signs as he tries to revive India’s economy. 

On the one hand, economic growth has been slowing for five quarters, weighed down in part by demonetization and a new nationwide sales tax. On the other, some analysts and investors say these very steps -- and others such as inflation targeting, a new bankruptcy framework and encouraging foreign investment -- have laid the groundwork for much faster expansion once the $2 trillion economy adjusts. In trying to legitimize and tax India’s vast informal economy, Jaitley has the



unenviable task of ensuring the hiccups aren’t a sign that something deeper ails the nation. 

“Despite the gradual pace of recovery on the ground,” the ongoing reform push by policy makers “will help improve productivity dynamics and lay the foundation for sustainable growth,” said Tanvee Gupta Jain, a Mumbai-based economist at UBS AG. 

The government is considering more measures to boost the economy and will announce the steps after consulting Prime Minister Narendra Modi, Jaitley told reporters on Wednesday.