Rabobank in its India report ?Rise of Elephant? has said though the stable expansion scenario was the most desirable outcome of any economic reforms, a cooling down period was a likely outcome keeping in view the policy direction of balancing growth and inflation.
The first signs of policy contraction, the cooling down of the economy were already becoming visible, the report said. If, however, too little progress is achieved in addressing the economy?s structural challenges or policy contraction, demand growth may run into supply constraints in the not-too distant future, said the report.
The potential unfolding of the overheating scenario risks is a suboptimal outcome. The adverse shock scenario describes a worse scenario in which most of India?s recent progress would be undone.
According to the report, in recent years the Indian economy has shown an excellent growth performance with annual growth rates closing in on 9% per annum, a Chinese style growth rate.
The rise of the elephant should come not as a surprise, however, India is merely reclaiming the role it played through much of the history, it be dubbed as a re-emerging market, Rabobank said in its report.
Even though India has an established reputation as a destination for outsourcing services, only in recent years has the country?s full economic potential come to the spotlight.