Domestic factors are a bigger constraint to India's shift to a faster growth trajectory than global factors, rating firm Crisil said in a report on Thursday.
Domestic factors are a bigger constraint to India’s shift to a faster growth trajectory than global factors, rating firm Crisil said in a report on Thursday.
“The Indian authorities’ efforts to contain its high fiscal deficit and inflation limit its ability to generously use counter-cyclical policy tools to boost the economy,” said Crisil’s chief economist Dharmakirti Joshi. “Weak demand, low capacity utilisation and high leverage are impediments to reviving the private corporate investment cycle.”
India’s economy grew by at a lower-than-expected rate of 7% in Q1FY16. In its monetary policy review on September 29, the Reserve Bank of India lowered its economic growth forecast to 7.4% in FY16 from an earlier prediction of 7.6%. Finance ministry officials have also accepted that the economy would grow at above 7.5% from an earlier optimistic projection of 8-8.5%.
The Crisil report noted that global developments since 2014 have had a mixed impact on India. While lower crude oil and commodity prices have helped to rein in fiscal and current-account deficits and inflation, slack global growth has hurt India’s exports.