Global rating agency, Moody’s has forecast a growth rate of about 7.5 percent for the Indian economy in 2016 and 2017. This growth will be driven largely by private consumption growth.
Moody’s said the prevailing low headline inflation is expected to continue, helped by a good monsoon, which will allow the Reserve Bank to maintain its current accommodative stance. But Moody’s noted that while India’s GDP growth is strong, private investment remains weak. Capital utilization rates also remain low.
Moody’s also observed that, going ahead, the impact of weaker commodity prices is likely to fade over time, with the stabilization of commodity prices. It said since external demand is likely to remain lackluster, a sustained improvement in domestic private investment will be required to sustain the growth momentum.
