India’s GDP growth expected to take off

By IAC Staff

Low inflation and gradual implementation of structural reform will help India to post GDP growth of about 7.5 percent in FY2016, according to Moody’s Investors Service. The ratings agency said in a report that an accommodative monetary policy would support the growth environment. The agency also changed its outlook for the Indian banking system to stable from negative because it sees gradual improvement in the operating environment for Indian banks, resulting in reduced occurrence of bad loans.

Separately, Indian brokerage, Anand Rathi and Company, said in a report, India Ecotrix, that India is posed to grow at the rate of 8-9 percent a year over the next five years, the fastest in the world. The brokerage expects the equity markets to offer returns of about 20 percent over the next year. The report said however, that the Chinese economic slowdown was the prime challenge to India’s growth.

Although consecutive seasons of poor crops have taken its toll on agriculture and its impact on GDP, the brokerage feels improved investment outlook and manufacturing production will offset the dullness. The report also said India was not likely to be adversely affected by a US rate hike.

However, due to the Chinese economic situation the report said the brokerage expected India’s share in global foreign direct investment (FDI) to rise but that of foreign institutional investment (FII) to fall.

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