Wikipedia defines the aviation term clear air turbulence (CAT) as the turbulent movement of air masses in the absence of any visual clues, such as clouds, and is caused when bodies of air moving at widely different speeds meet. So, even though the skies may be clear, CAT may lead to a bumpy flight. The Indian economy is in a somewhat similar situation. A stable government led by the Bharatiya Janata Party is on the threshold of completing its full five-year term, some transformational steps relating to the economy have been undertaken and overall, the economy seems to be chugging along at a relatively smooth pace. In fact, even though Indian analysts may fret about GDP growth slowing down to 6.6% in the third quarter of FY19, the lowest in six quarters, several economies across the world would be ready to give an arm and a leg to have the rate of growth India is witnessing.

However, scratch the surface a little, and you begin to see the CAT metaphor playing out. The state of the banking sector continues to be fragile despite the landmark Insolvency and Bankruptcy Code (IBC) being put in place, the private sector is still very reluctant to invest, farm distress is rising, and unemployment poses a grim challenge.

As India goes to the polls in April-May to elect a new government, we at Fortune India take a close look at some of the steps taken by the Narendra Modi government, the challenges that stare the economy in the face, and what the next government needs to do to ensure the economy is piloted to safety. Led by deputy editor Ashish Gupta, we spoke to several policymakers, analysts, and corporate leaders to get a sense of what has been achieved, the headwinds ahead, and the agenda for the next government.

What clearly comes through is that there have been some major reforms undertaken by the Modi government—the IBC and the implementation of the goods and services tax (GST) regime being the two most widely pointed out by corporate leaders—but much of the good work on the economy can end up being undone if the threats of farm distress and unemployment aren’t addressed on a war footing. Add to that the absence of aggressive private sector investment, an uncertain global environment, and a weaker rupee and you have a situation where the next government could have to grapple with some major problems relating to the economy.

Corporate leaders admit they are “cautiously optimistic”. Demand is not enough yet to warrant fresh investments, capacity utilisation is still not high enough to require installation of fresh capacities. The general consensus on the agrarian distress is also that farm loan waivers—something where political parties are trying to outdo each other this election season—are only a temporary solution addressing the effects of the problem, not the root cause.

The corporate sector feels what is really needed is a kind of a booster dose for the economy, a mix of monetary and fiscal stimuli, along with the next set of reforms, to ensure economic activity is kickstarted once again. Some signs of that are visible, with the new Reserve Bank of India governor Shaktikanta Das seemingly in step with the government on pushing growth. But a lot more needs to be done. The next government which takes charge at the end of May will hold the key to what happens next. And it will need to act quickly.

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