Global rating agency, Moody's Investors Services has reiterated its stand, projecting stable growth rate for India and has said that the Indian economy would grow at 7.5 percent in the current fiscal and improve marginally in the following year. It said “We expect that India’s real GDP will grow at 7.5 percent in the financial year ending March 31, 2016 (FY16) and 7.6 percent in FY17,” it further added that these growth rates would be slightly faster than the 7.4 percent recorded in FY15 and substantially better than from FY12 to FY14.”
In its report it also pointed that India’s average annual expansion of 7.7 percent over the past decade is one of the fastest growth rates globally, as its favorable demographics and the opportunities afforded by a large and diverse national market with high levels of savings have overcome the effects of weak physical infrastructure and sometimes disjointed policies. However, during this long growth period, the country experienced a significant slowdown in FY12-13 driven in part by policy bottlenecks impacting project investments. Though, in past two years (FY14-FY15), some of these problems were addressed. There has been a focus on improving the ease of doing business, particularly with respect to approvals required from the government.
The report also highlighted that in contrast to a few other emerging markets, India is a key beneficiary of decline in commodity prices, especially oil and noted that India has weathered the recent volatility in emerging markets much better than peers, as seen in the relatively modest deterioration in the currency, 'indicating that investor sentiment remains supportive' of the country's economic outlook. Further, there has also been a pick-up in public-sector investments, particularly in areas such as railways and roads, to compensate for the weak levels of private-sector capital investment, it added.
Moody's further said that Reserve Bank will likely maintain its accommodative stance over the outlook horizon, supporting the operating environment for banks and added that an accommodative monetary policy should support the growth environment.
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