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India's economy to grow 7.5 per cent in fiscal 2016: Moody's analytics |
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NEW DELHI: The Indian economy is expected to grow marginally faster at 7.5 per cent this year compared with 7.2 per cent in 2014, helped by interest rate cuts that will buttress private sector spending, said a group company of global ratings firm Moody's.
"Our tracking model suggests that first-quarter GDP growth is tracking around 7.3 per cent, a slowdown from prior quarters. But we expect this softness will prove temporary with improving domestic demand to help India's GDP grow 7.5 per cent for all of 2015," Moody's Analytics said in a report. Earlier this week, the International Monetary Fund projected that India would overtake China as the fastest growing emerging economy in 2015-16 by posting a growth rate of 7.5 per cent, helped by its recent policy initiatives, a pickup in investment and lower oil prices. The World Bank too has a similar growth forecast on India for the current fiscal year. India's economy is on a cyclical upswing and forward-looking indicators suggest domestic demand is gathering momentum, Moody's Analytics said.
"Low inflation has enabled the Reserve Bank of India to cut interest rates by 50 basis points (half a percentage point), easing pressure on the private sector. Lower rates as well as the government's infrastructure and disinvestment programmes should provide a boost to domestic-oriented industries," it said. The government wants more foreign businesses to invest in India, with a focus on public and private partnerships, it said. "Foreign investment in India has been weak because of significant red tape and taxes. The government is taking encouraging steps to reduce these burdensome regulations to entice more foreign investment." On India's disinvestment plans, it cited strong investor demand in the recent sale of a 5 per cent stake in Rural Electrification Corp and said "the government should have few problems" in selling its assets. The government aims to raise Rs 70,000 crore through disinvestment in fiscal 2015-2016.
"India's state-owned companies are notoriously inefficient, with significant bureaucracy and endemic corruption," Moody's Analytics said.
Source : economictimes.indiatimes.com
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