Isolationism has its own benefits and globalisation its own perils. While the major drivers of global growth-including the US, European Union, Japan and the upstart South East Asian economies-agonise over the fallout of the US-Iraq war, earnings disappointment from the corporate world, and now the SARS epidemic, Indian economists seem to be sitting pretty. They are smug in the belief that there is little to stop the lumbering elephant from continuing its 6 per cent-plus growth.

In fact, almost everybody from the Reserve Bank of India to the independent rating agencies such as CRISIL is predicting a 6 per cent plus growth this year, even discounting the initial reports from the met department of less than normal rain this year. Their confidence stems mainly from an expectation of a rebound in agricultural growth-especially after the dismal performance last year, when the sector registered a negative 3 per cent growth. Agricultural growth this year is most likely to touch 3-4 per cent, thereby putting the GDP growth on the 6 per cent trajectory.

The other important sector, industry, seems to be on the revival path as well. After suffering for years from overcapacity, declining prices and fierce competition, thanks mainly to the excessively optimistic projections made in the three good years (1994-97), industry growing at 6-6.5 per cent a year seems very much a reality. The overcapacity problem finally seems to be over, and after many rounds of re-engineering Indian industry is ready to take on both the domestic and overseas competition. After all, the Index of Industrial Production for the first 11 months of last financial year show a healthy 5.7 per cent growth. And the ever-dependable services sector will continue to chug along at a robust 7-7.5 per cent rate, even though there may be temporary hiccups such as the ones it services is currently witnessing.

Then there are other positives of the economy that the sanguine economists are counting on. With a less than 1 per cent share of the world trade-0.77 to be precise-and a huge domestic market, the Indian economy is far less susceptible to a global (read: US) slowdown than its more influential peers such as Korea, Singapore, Malaysia, and Thailand. Therefore, the pitfalls of globalisation are unlikely to undermine the Indian economy to any significant extent.

Similarly, the SARS virus, which seems to have taken its toll of various economies, including that of China, has not really hurt the Indian economy. Other than cancellation of a few export orders and some loss to the travel and trade industry, the economy is none the worse for it. India too will weather this storm as it did the short-lived US-Iraq war and the two oil crises before.

The isolation notwithstanding, the Indian economy is on a strong wicket. Despite the massive spike in oil prices during the US-Iraq war, when oil prices surged 29 per cent in two months, inflation is not really going to go through the roof. A country that has regularly lived through 8 per cent to 10 per cent inflation in the 1980s and 1990s is unlikely to see inflation cross the 5 per cent mark this year. Clearly, the Indian economy is now much more resilient than it was in 1991.

Similarly, exports have continued their dream run, clocking over 16 per cent growth in the first 11 months of last fiscal, despite the slowdown all around. More importantly, the US-Iraq war may have a positive impact on the flow of remittances into India, which in turn will have a beneficial impact on the current account balance. Again, tax collection-so important to keep the unsustainable fiscal deficit in check--is growing at a healthy 15.3 per cent (April 2002 to January 2003). Put all that together and you know why optimism is the flavour of the moment.