Crisil the homegrown global analytical agency has said that for Indian economy there is no sign of sharp rebound in the next fiscal year, as the fiscal policy remains restrictive. It also added that it needs support from accommodative monetary policy and less restrictive fiscal policy plus structural reforms to have a turnaround.
The rating agency further said that fiscal 2017 will mark the mid-point of the Narendra Modi government which will be closely watched for its success in getting the pending big ticket reform bill such as the GST and Bankruptcy code passed which were announced in 2015. The passage of these bills would not only be a big sentiment booster but is necessary to enhance country's medium-term-growth potential. The agency has predicted that monsoon will also be a major factor to decide the consumption.
Besides, the agency said that leverage and non-performing assets (NPAs) of banks will remain a challenge in the next financial year and added that unless NPAs are not cleaned they will restrict the flow of credit into the system, and hence will remain a constraint to the growth. The arteries of the banking system need to be de-clogged to ensure the smooth flow of credit.