India Economy to Gain Momentum in H2 2017

India’s economy is expected to fare better in the second half of the current fiscal backed by uptick in sales and improved capacity utilization, though fresh investments and new jobs creation may be a concern going forward, according to an Assocham report.

Besides, an increased spending on infrastructure development, largely by the government, is seen as the most important driver for a turnaround in the economic outlook for the period between October and March this fiscal, it added, PTI reported.

Over 66% respondents polled in the Assocham Bizcon Survey expected improved sales and capacity utilization during the second half of the fiscal, but remained uncertain on fresh investments coming in.

However, in the short term, the survey indicates that there will not be any change in the employment scenario in the industry. As majority (55.6%) of respondents believe that employment conditions will not improve in the coming days.

Besides, 38.9% of the respondents feel that their profits may not change in the short term, October to December.

The second best driver for the optimistic outlook are effective policy reforms followed by a stable foreign exchange rate of the Indian currency despite global head winds like uncertainty on account of the Federal Reserve’s next policy move and the most bitterly fought US presidential elections.

“Good thing is, there is a clear turnaround in business confidence, globally, which holds the key to new investment and consumer confidence,” Assocham President Sunil Kanoria said.

 Private Sector Must Invest

Finance Minister Arun Jaitley said on Saturday that public and foreign investment remains intact, but private sector expansion is needed in a big way to let the economy start firing on all cylinders. Observing that domestic investment continues to be a challenge, Jaitley called upon the banking sector to support corporates to propel growth.

“Indian private sector needs to expand in a big way. It needs to invest and that’s when all engines of economy (will) start firing,” Jaitley said while addressing a seminar on debt recovery in Gurugram, a city southwest of New Delhi.

The minister spoke of liberalization of FDI policies because of which India has emerged as a preferred destination of foreign investment.

“Foreign investors are getting far greater returns on their investment here than in any other country,” he asserted. “Public investment and foreign capital on which the economy is firing are intact… Domestic investment is still a challenge.”