India's Growth Will Slow Somewhat But Remain Robust Says OECD

India's economic growth will slow somewhat but remain robust, at close to 7.50% in 2019 and 2020, noted the Organization for Economic Co-operation and Development (OECD) in a latest update today. Higher oil prices and the rupee depreciation are putting pressure on demand, inflation, current account and public finances. However, business investment and exports will be strong, as past structural reforms - including the new Insolvency and Bankruptcy Code, smoother implementation of the Goods and Services Tax (GST), better roads and electricity and bank recapitalisation - are paying off.

Monetary policy will need to be tightened as inflation expectations are trending up and there are several upside risks to inflation. Containing the relatively high public debt-to-GDP ratio would require controlling contingent liabilities, such as those stemming from public enterprises and banks. Further subsidy reform would help make social spending more effective. Improving public banks' governance is also key to avoid a new wave of non-performing loans and to support the investment recovery.

Powered by Capital Market - Live News