Indian growth story received a thrust on 12 May when rating agency Moody’s said that the country would grow at 7.5 percent in 2015-16, highest among G20, helped by the reforms drive and lower oil prices.
Moody’s Investors Service said, “Lower oil prices will strengthen enhancing reforms in order to support healthy economic activity over the forecast period. Thus we forecast a strong growth in India, at 7.5 percent in 2015-16,” it said, in a report.
At a time of shifting global investment flows, India benefits from reduced external imbalances, it said. “We expect a balanced current account for first time in 10 years, thanks to lower energy import bill and restrictions in gold imports,” Moody said.
India would be a beneficiary of softer oil prices among G20 as the country is a major crude importer. G20 is a group of 20 developing economies, which accounts for 85 percent of the world’s economic output.
Furthermore, the ‘Make-in-India’ campaign of Prime Minister Narendra Modi will boost domestic manufacturing and other reforms measures so as to bring in higher investment and boost growth, it said. “If implemented, the reforms and support for business favouring policies will help achieve higher growth than in 2013-14,” Moody’s said.
It said the targeting of inflation by the Reserve Bank of India (RBI) would ensure higher inflation on food products.
“We also forecast ongoing moderate inflation will enable better investment. Lower inflation will raise real incomes, profits and GDP growth,” it said.