Govt’s measures may boost sentiment, eco recovery likely only in next fiscal; these 2 factors are key

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Published: October 9, 2019 12:08:43 PM

Even as the announcements by Finance Minister Nirmala Sitharaman are expected to boost investor sentiment in the near term, the overall economic improvement is only expected by the next fiscal, a report said.

NDA government, indian economy, HM Desarda, GDP growth, Maharashtra, modi government, NHAI, nirmala sitharamanWhile exports may continue to be muted owing to trade wars and lower global demand, imports are likely to limited due to weak demand conditions.

Even as the announcements by Finance Minister Nirmala Sitharaman are expected to boost investor sentiment in the near term, the overall economic improvement is expected by the next fiscal, a report said. The investment is only expected to pick up depending on sustained rise in consumption demand over a period, CARE Ratings said. While exports may continue to be muted owing to trade wars and lower global demand, imports are likely to limited due to weak demand conditions, it added. However, in the last two quarters of the running fiscal, an improvement is expected on account of a slight boost in demand buoyed by festive demand in general and rural spending from a good harvest, CARE Ratings also said in the report.

The government has come out with a slew of economic reforms in the last few weeks to boost sagging economy and weak consumption demand. The measures range from doing away with enhanced surcharge on FIIs and bank recapitalisation. Nirmala Sitharaman has also asked the PSU banks to increase credit outreach as a result of which the lenders would hold ‘loan melas’ in 400 districts over a period.

Watch video: What is inflation? EXPLAINED

“The easing of foreign investment rules and long term domestic growth potential could drive inflows into the country,” the report said.

Also read: India slips 10 places to 68th on global competitiveness index; Singapore on top

On inflation, the report said that the prices would continue to be within the RBI’s target of 4 per cent. Even as the NBFC sector and some other banking sections remain under stress, the loans from the banking system would be limited, CARE Ratings said. “Corporates would continue to increasingly tap the domestic and international markets for their funding requirements,” it noted.

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