India's economic growth: 4 key hurdles ahead

May 05 2014, 09:29 IST
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According to Moody’s, India’s GDP could be in the 5 pct range in FY15 but a sustained acceleration to growth averages beyond 6 pct is unlikely. According to Moody’s, India’s GDP could be in the 5 pct range in FY15 but a sustained acceleration to growth averages beyond 6 pct is unlikely.
SummaryThe rating agencies see India's economic growth hovering at 6 per cent in FY15.

India’s economy will remain 'well below the peaks achieved in the previous decade in the next two years' even though the worst is over, say rating agencies. The agencies, including Moody's, see India's growth hovering at 6 per cent in FY15.

The country’s sovereign rating, however, could see an improvement if there are positive changes in its infrastructure and regulatory constraints, effective management of inflation and reduction of fiscal deficit and government debt burden.

Here are some hurdles to the India's economic growth:

1. Moody’s Investors Service says that the country’s sovereign rating could see an improvement if there are positive changes in its infrastructure and regulatory constraints and the management of the economy

2. Even as growth could be in the 5% range, rating agencies believe that positive factors cannot propel growth to beyond 6%

3. The primary constraint affecting growth is that the economy is stuck in a phase of low consumption and investment demand

4. The possibility of a weak monsoon due to the El Nino effect could delay the economic recovery as food inflation could be higher and purchasing power reduced.

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