Niranjan Rajadhyaksha has a good column on India’s enhanced policy credibility. I am agnostic about rate cuts now. I am neither for nor against it. Perhaps, there is scope for 25 bp.rate cut.
As for credibility being regained from the last days of UPA, the answer is that they deserve credit for tackling the diesel subsidy. It is also an interesting case study as to how other political parties did not disrupt it as they do now. They did through a 50-paise increase every month. It was not interrupted for too long.
Wonder if the Congress built a better consensus around it than NDA II did with its haughtiness or was it an accident?
On this point, “… Indian fiscal policy continued to drift, at least till the return of P. Chidambaram to the finance ministry in July 2012.”
As for the credibility of fiscal policy, no UPA did not rebuild it despite PC becoming FM and Kelkar recommendations. The UPA government engaged in creative accounting and postponement.
The mid-year economic appraisal of the economy published in Dec. 2014 was clear that the fiscal deficit inherited by NDA II was over 6% and it was dead right.