The mid-year review of the Indian economy for 2005-2006 presents the economic scenario with cautious optimism. The return to buoyant performance of the manufacturing sector, the continuing buoyancy of the services sector, the sharp increase in the savings rate and the creditable performance of exports present an optimistic picture of the Indian economy. Despite the severe fiscal imbalance, sharply increasing oil prices and a poor political climate for reforms, the economy has registered a growth of over 8 per cent in the first half of the current year.