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India Growth Outlook Trimmed
World Economy

India Growth Outlook Trimmed

India’s economic growth will likely slow to 7.0% to 7.5% for the financial year beginning April amid significant global economic headwinds, according to a government report.
The annual Economic Review for 2015-2016 pegs growth for the current fiscal year at 7.6%, against an expansion of 7.2% the previous year, Nikkei reported.
The report, drawn up by India’s chief economic adviser, Arvind Subramaniam, and unveiled on Friday, said the country’s long-term potential GDP growth is substantial, at about 8-10%, but that actual growth in the short term will depend on global growth and demand. Exports of manufactured goods and services now constitute about 18% of India’s GDP, up from about 11% a decade ago.”
At a time when the newest normal for the world economy is one of turbulence and volatility, India is a refuge of stability and an outpost of opportunity,” said the report. “For an economy where exports have declined due to weak global demand and private investment remains weak, India’s economy is performing remarkably well.”
The economic survey sets the tone for what to expect from the general annual budget. The details of this year’s budget are scheduled to be released Monday.
The report called the Indian economy a “relative haven of macro-stability” in turbulent times, but warned that the uncertain and fragile outlook will complicate the task of economic management.
Given such global uncertainty and likely weakness in foreign demand, India may be forced to find and nurture domestic demand to prevent the growth momentum from weakening.
“One tail-risk scenario that India must plan for is a major currency readjustment in Asia in the wake of a similar adjustment in China, as such an event would spread deflation around the world,” the report said. “Another tail-risk scenario could unfold as a consequence of policy actions—say, capital controls taken to respond to curb outflows from large emerging-market countries, which would further moderate the growth impulses emanating from them.”

 FDI Rises
Foreign direct investment into the country increased by 40% to $29.44 billion during April-December in the current fiscal, PTI reported.
The foreign investment inflows were at $21.04 billion in the same period of previous fiscal.
Among the sectors, computer hardware and software industry attracted the highest FDI of $5.30 billion during the period under review, followed by services sector with $4.25 billion and trading business with $2.71 billion.
Automobile industry attracted FDI of $1.78 billion, while chemicals sector cornered $1.19 billion foreign equity investment in April-December 2015, the Department of Industrial Policy and Promotion data showed.

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