New Delhi, Dec 28 (IANS) Despite a sharp drop in global crude oil prices and inflation easing to historic lows, the Indian economy's performance in 2014 was not particularly comforting, as industry continued to struggle, fiscal and trade deficits widened, and the rupee came under renewed pressure.

As per official data, the economy's growth fell from 5.7 percent during the first quarter of this fiscal to 5.3 percent in the second with manufacturing output declining by 0.7 percent in a clear indication that revival of industry was nowhere on the horizon.

The upside came mainly from a 9.6 percent growth in social services, 9.5 percent in the financial sector, 8.7 percent in utilities and 3.2 percent rise in farm output. The annual inflation based on wholesale price index at nil and retail index at 4.38 percent in November were also notable.

The government, however, was certain that a 5.5 percent growth was possible this fiscal, as spelt out in the mid-term review of the economy this month, and that a 7-8 percent expansion was also reachable in the coming years with proper policy measures that were being pursued.

These apart, after years of perceived paralysis on the economic reforms front, the Narendra Modi government that took over the reins in end-May started pursuing liberalisation once again and took some key decisions, some of which have been pending for over a decade.

To send the right signals to overseas investors, who were worried over measures like the levy of taxes with retrospect effect as in the case of British global mobile telecom giant Vodafone, the government said it will no longer resort to such measures and have a transparent tax system.

The heads of the three apex chambers -- Ficci, CII and Assocham -- told IANS that many of the initiatives led by Modi himself also made a major impact globally, notably the campaigns like Make in India, Clean India, Zero-Defect-Zero-Effect Manufacturing and Digital India.

"The many decisions to hike railway fares, raise foreign investment limits in defence, realty, and insurance, attract overseas equity in railways and reforming fuel price regime have all helped to contribute to a renewed confidence," said CII director general Chandrajit Banerjee.

The government also promulgated ordinances to pave the way for the auction of coal blocks that had been cancelled by the Supreme Court, permit 49 percent foreign equity in insurance and ease the norms for overseas investments in medical devices like pace makers and stents.

The fall in global crude prices was also something that came as a pleasant surprise for the consumers and the government, falling from around $115 per barrel to around $58 now, helping the oil marketing companies to actually announce price cuts in transport fuels.

As a result, pricing of diesel was once again de-regulated to allow oil marketing companies to fix their prices freely, even as the long-pending revision of gas prices were announced in a limited manner. The prices for discoveries in deep waters was left for later.

Yet, government finances are far from comforting. There are indications that the fiscal deficit targeted for this fiscal year by Finance Minister Arun Jaitley may have already been breached, even as his ministry exuded confidence of keeping it at 4.1 percent of gross domestic product.

The signals from the markets were mixed. The benchmark 30-share sensitive index (Sensex) of the Bombay Stock Exchange has risen by an impressive 28 percent so far in this calendar year, even as the rupee remained weak slipping from 61.75 to a dollar in January to around 63.88 now.

On the external side, exports logged around five percent growth but imports ballooned, due mainly to the inward shipments of gold and oil, for the better part of the year, resulting in widening of the trade and current account deficits.

Going forward, industry outlined some areas of concern and wanted policy makers to address them.

"The Goods and Services Bill has been introduced in the Lok Sabha. Now, the cutting of interest rates by the Reserve Bank of India remains. Between these lie almost everything major that the Indian industry has been looking forward to," Ficci president Jyotsna Suri told IANS.

Not one to walk the popular path and known to give frank opinions, RBI Governor Raghuram Rajan gave his assessment on how he saw the outlook. "We are not in a phase of strong growth as yet. But there is this high possibility that India grows reasonably strong over the next two years."

Highlights of Indian economy in 2014:

* Foreign equity norms eased in defence, insurance, railways, medical devices and realty

* Railway fares hiked, diesel de-regulated

* Campaigns like 'Make in India' and 'Digital India' launched

* Economic growth improves but still below 5.5 percent

* Stagnation of industry output continues but inflation at historic low

* Key stock market index up 28 percent but rupee drops to 63.8 to a dollar

* Fiscal, trade and current account deficits widen sharply

* Business confidence levels in industry, ease of doing business improves

* Divestment of stake in state-run companies resume

* Stage set for auction of coal blocks, spectrum for telecom operators.