Economic forecasts are always surrounded with an amount of uncertainty, but you can try to narrow uncertainty by combining different tools. Our main forecasting tool is macro-econometric trade model NiGEM [National Institute Global Econometric Model]. Using NiGEM has its upsides, as the world and individual countries are forecasted integrally. If, hypothetically speaking, India’s most important trading partner, the United States, would face a crisis or implement trade barriers and this would lead to lower import, this directly affects Indian exports and thus the economy. But one can’t solely rely on NiGEM. NiGEM doesn’t take into account, for instance, demonetization or GST.So, besides NiGEM we use so-called satellite models, which are used to break down and forecast the expenditure components of GDP. The forecast of these expenditure components is done by a combination of analyses, including trend analyses, analyses of leading indicators, and analyses by a separate department within Rabobank (Credit Financial Institutions), which explicitly covers the health of the banking sector. Of course, expert opinion is important and our economic research department has quarterly and monthly calls with our Rabobank office in Mumbai to discuss economic and political developments. It would be impossible to make good predictions without having sufficient and excellent information from Rabobank’s ‘ears and eyes’ on the ground. With regard to the forecast of 5.7 itself in FYQ1, I guess we hit the sweet spot in our assessment of the development of the underlying expenditure components and inflation using the described methodology. We knew demonetisation would at least weigh on private consumption for at least one or two quarters. Moreover, private investment growth has been deteriorating on the back of weak bank sector lending.NiGEM stands for National Institute's Global Econometric Model, which is developed in London and is used by several other organisations as well, such as the European Central Bank and the Bank of England. It is based on New Keysian principles. Countries are linked to each other through trade and competition, interaction of financial markets and international asset stocks. The behavioral equations are econometrically estimated, but have a long-term structure based on economic theory. Lastly, NiGEM is an error-correction model, which ensures that short-term deviations of GDP from a country’s growth potential are made up eventually. So, ultimately, growth is driven by structural factors, such as capital formation, structural employment and labour-augmented technological change.The question whether or not growth of the Indian economy will pick up later in this fiscal year depends on whether you regard the current weakness as being transitory or permanent. We do not have any readings that the current weakness is structural in nature. We do believe that FYQ2 will be weak (5.9%) due to negative effects of GST. But for FYQ3 and Q4, we believe most of the GST and demonetisation pain have petered out, and we expect the Indian economy will recover and even see faster than trend growth on the back of higher private consumption, spending and recovering of private investment. We indeed have some anecdotal evidence that suggests that firms are actively examining possibilities to increase capacity. Moreover, ongoing government investment in the defense industry and on infrastructural projects will continue to support growth.GST has probably caused some disruptions in the economy, just as demonetisation did. Especially small and medium-sized firms had difficulties repricing their goods and some closed the curtains for a couple of days. This might explain why July PMI’s were awful. Moreover, especially several services sectors, such as financial intermediation and hotels and restaurants, will be confronted with higher costs due to shift in their taxing regime. More in general, we expect GST to shave off some economic growth later on this year due to problems with digital filings and the refund of paid taxes on inputs, which will especially be problematic for exporting companies. In the longer term, we do expect GST to prop up India’s growth potential, as the old cascading tax regime was very inefficient. We expect that GST will help pushback on tax evasion and prop up government revenues. In fact, we already see up till October, annual net tax revenues were 13% higher compared to the same period last year. Lastly, GST will provide the government with rich new data on the demand side of the economy (bank accounts information of consumers and firms), as well as the supply side (new business registrations and value chain information). This data is valuable to enhance policy effectiveness.Personally, I think the Modi administration is already taking important steps. Although demonetisation and GST were perhaps implemented too prematurely, the reforms themselves were necessary to improve the economic structure of India. The more recent announcement by the government to recapitalise the ailing banking sector in combination with the improved mandate (i.e. Amended Banking Regulation Bill) of the RBI to resolve bad loans are also important to get the economy back on track. Moreover, the measures to prop up infrastructural investment are also favorable, but the positive additional effects on the Indian economy will probably only materialise after a certain time.There are, of course, still a lot of things that need to be done. In the short term, for instance, the professionalisation of the economy (for instance, the public banking sector) is an important one. In the longer term, labour market rigidities will need to be tackled, but the current gridlock in the Upper House prevents Modi from pushing on with reforms in that area. Moreover, there is also a risk to prop up investment top down too heavily, like China did right after the global economic meltdown in 2009. China currently is struggling to scale down its massive corporate and local debt burden and to restructure inefficiently allocated capital and labour. India should be wary to get the economy addicted to public investment which don’t have any guarantee of repaying themselves. And although we underline the fact that a solid infrastructure is a conditio sine qua non for an attractive business climate, it is a missed opportunity that the announced stimulus package of the Indian government is not paying any attention to fostering so-called total factor productivity (TFP) growth, which is determined by innovative capacity, proper education and training of the work force and improvement of institutions. Ultimately, TFP will determine whether India will be able to avert the so-called middle income trap. Compared to other countries, India still ranks position 100 in terms of ease of doing business, has low education levels and low patent generation.Perhaps the demonetisation was implemented somewhat prematurely. Given the sheer size of the enormous operation, new notes should have been printed in secret beforehand as well as a circulation plan should have been created which labelled the extent of needed liquidity on a local level. ATM’s could have been calibrated beforehand as well (the new notes appeared too small for the existing ones). Banks should have been mandated to staff extra personnel and make necessary preparations. All this should have been ready before the launch, in order to limit disruptions to the payment system as much as possible. In the end, however, we still believe that this bold action by the government will help to foster digital payment and lower the velocity of money, formalise the economy and lead to higher tax revenues in the longer run.