The year’s twists and turns, its depths and its lows were, not surprisingly, best captured by contrasting headlines at its beginning and at its end. If the flavour of the year was India’s collapse and its subsequent recovery, albeit weak, the lead headline on January 1 was India’s current account deficit (CAD) at a record 5.4% in Q2 and a fiscal deficit that was so large, 80% of the year’s target had been used up by August 2012 itself; at the end of the year, the headlines were about the CAD being largely under control (Q2 CAD was a mere 1.2% of GDP) but, on the fiscal side, it was remarkably similar with 84.4% of the year’s deficit being used up by October. The year began with the rupee at 54.69, the Sensex at 19,581 and GDP at 4.7%; it ended with the rupee at 61.8 after having travelled all the way down to 68.83 and the Sensex at 21,033 though GDP growth was roughly similar—in between was a remarkably topsy-turvy journey, some of which is covered on the graphs on this page, the salient parts of the rest on the different pages of this special section.
The other big story on FE’s page 1 on the first of January was the impending US fiscal cliff which, added to the dismal economic performance—0.1% GDP growth in the December quarter of 2012—spelt disaster for the global economy; not surprisingly, India’s exports growth was contracting in the last few months of 2012. By the end of 2013, US growth had roared back to 4.1% (in the September quarter), a number not seen in six previous quarters. While both were reason enough for the Fed to finally start its taper, the biggest reason was an agreement on the budget, phew!
On FE’s front pages, the year began with the National Highways Authority of India (NHAI) threatening to take the environment ministry to court for delaying projects—a few weeks prior to this, the GMR Group had driven off the 555-km long Kishangarh-Udaipur-Ahmedabad highway for which it had promised to pay NHAI over R9,000 crore on an NPV basis. At the end of the year, not much had changed in terms of environmental clearances, but stung by a 4:1 loss in the assembly elections, a chastened government ensured environment minister Jayanthi Natarajan was recalled to the party and Veerappa Moily was given additional charge of the ministry—Moily