Just ahead of the release of the fourth quarter GDP numbers, the global credit rating agency, Moody's Investors Service in its latest report ‘Global Macro Outlook’ has said that Indian economy will grow by 7.5 per cent in the current fiscal year, 7.7 per cent in 2018-19 and will reach to around 8 per cent in 3-4 years on the back of government's various reforms.
The agency said that the economy will strengthen as the impact of last year's demonetization fades and with the government successfully pushing through several key reforms such as liberalisation of FDI rules in a number of key sectors, July rollout of the Goods & Service Tax (GST) and a national bankruptcy code, noting that these reforms will help reduce inefficiencies and improve trend growth over the long run.
However, the report has pointed that the private sector investment has remained weak despite progress on reforms. On the problem of mounting bad loans, Moody's noted that persistent banking sector weakness from a high proportion of delinquent loans on bank balance sheets will weigh on growth, if not resolved, by constraining credit for investment related activity. Besides, it said that the inflation rate will rise to around 5 per cent by the end of this year and expects the Reserve Bank of India to hold the policy repo rate steady, holding a neutral stance in this growth environment.