India's economy faces an ominous new year in 2018

Mumbai

YOU would think the Indian economy had returned to rosy health. It seems to have recovered from two enormous disruptions - Prime Minister Narendra Modi's decision just over a year ago to withdraw 86 per cent of the currency in circulation, and the poorly-planned rollout in the middle of 2017 of a new goods-and-services tax.

Exports are no longer declining, as they had for several quarters; indeed, for the last month that data is available, they rose 30 per cent. The Purchasing Managers' Index expanded the fastest it has in five years. At least one international ratings agency has upgraded the country's credit rating.

Most importantly, growth sped up in the last quarter for the first time since early 2016. There is every reason to…