Goldman Sachs: Indian economy's long-term growth rate potential 7%
effect for the country should be positive," the report said.
Goldman Sachs said it continues to be overweight on India as the the domestic economic picture appears to have bottomed and is inflecting upwards.
The global economy is also improving, led by a rebound in EM growth and a number of difficult reform measures have been passed, and momentum is positive, it added.
According to the report, the challenges that India faces can be categorised into three areas: governance /efficiency, the fiscal and current account deficits, and infrastructure.
Regarding the widening current account deficit, Goldman Sachs said India's structural current account deficit, which is necessarily funded by capital account inflows, needs to diminish, or the country will be open to sudden shocks like the balance of payments crisis of 1991.
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