India can achieve 8% growth with supportive monetary and fiscal policies: S&P

The International credit rating agency Standard & Poor (S&P) in its latest report has stated that India needs supportive monetary and fiscal policies to achieve 8 percent growth in the next 3 fiscal years, economic reforms need to gain momentum. But the ability to deploy monetary and fiscal stimulus is limited by the absence of fiscal cushion and inflation dynamics.

S&P Global Ratings also projected India's economy to accelerate to approximately 8 percent in the next three fiscal years even as China slips to annual growth rates of below 7 per cent.  It further said in statement, India has edged out China as the world's fastest-growing large economy, despite a slowdown in global growth and tough times for many emerging markets. However, this outperformance could prove temporary if India's reforms do not gather greater momentum.

It added that, India will have to address issues plaguing private investment and banks will have to clean up their balance sheets. Companies in infrastructure and other asset-heavy sectors will also need to deleverage materially. Besides, the recent trend of strong economic growth in India could slow in the medium term if improvements in the country's infrastructure do not pick up. A heavy debt burden and relatively large fiscal deficits prevent heavier budgetary spending to ease this constraint. Past attempts at allowing the private sector a role in infrastructure have met with limited success due to legal and bureaucratic obstacles.