Betting on the private sector to fill the space vacated by the government is unlikely to work. Fiscal austerity hits India Inc both on costs (higher fuel prices, for instance) and demand (lower demand from government projects) and they are unlikely to step on the gas.

If Europe's experience is anything to go by and the government is indeed serious about fiscal discipline, it is perhaps deluding itself by insisting that a recovery in growth is around the corner. Read More