Crucial year for PM Modi's efforts to kick-start growth in India

2015 will be a crucial year for Indian Prime Minister Narendra Modi's reputation as a reformer. During his first six months in office, Mr Modi has made some progress on the policy front, unveiling a number of initiatives such as "Make in India" which is intended to kick-start manufacturing in the largely services-driven economy. His government has given the green light for several stalled projects and also appears to have made progress on the implementation of a goods and services tax which has been held up for nearly a decade.

But Mr Modi now needs to do more to fulfil the high expectations following his election last June and particularly to revive the India growth story. In this context, all eyes will be on the budget that his government will unveil next month. It has already been touted as a "transformational" budget and will have to live up to that promise. His government did pass an interim budget last year after coming to power. It was a reasonably good budget but not visionary.

But with Mr Modi's "honeymoon period" running out, it will be different this time. The government will have to perform a fine balancing act between bringing the budget deficit down and stepping up investment in India's inefficient infrastructure. The government has already reached 99 per cent of its deficit target for the fiscal year that will end on March 31. Fortunately for the government, the price of oil, which accounts for more than 60 per cent of India's imports, is at a historic low and the price of gold, another big import item, is also down, and the current account deficit is low.