This paper considers prospects for improving growth and income distrib
ution in India that are broadly sustainable in terms of macroeconomic
and environmental constraints. It first describes recent economic tren
ds and the reform process, using a simple framework which can incorpor
ate political economy issues. It then takes up environmental questions
and the interaction of the environment and the macroeconomy. Based on
this analysis, the economy's medium-term prospects are discussed unde
r current policy and an alternative approach which is arguably more pr
omising for growth, distribution, and the environment.