<h1>State capacity must be strengthened to ensure institutional delivery, accountability, and to recapture sustained economic growth momentum.</h1> India's trend growth depends on six microeconomic fundamentals: demographics, international economic integration, a more capable financial system, sophisticated firms, a more skilled workforce, and democracy providing rule of law. Recent cyclical slowdown reflected global shocks and domestic constraints, but early recovery signs and a series of statutory and regulatory reforms - including an integrated Indian Financial Code, a new Companies Act, transfer of commodity futures regulation to the finance ministry, and a statutory defined contribution pension system - aim to strengthen institutions. The central policy priority is augmenting State capacity to resolve market failures, deliver public goods, and ensure accountability.