Quality of growth improving, but jobs hold the key: Crisil

The report said that unlike China, the current growth in India is not supported by rampant credit creation

Quality of the country's growth is improving with focus shifting from boosting cyclical growth through fiscal and monetary stimuli to "repairing the system and initiating structural reforms", rating agency Crisil said.

"The biggest positive is that the policy focus hasn't been based on populism, or on boosting cyclical growth through fiscal and monetary stimuli, but on improving the 'trend' growth by repairing the system and initiating structural reforms wherever possible," it said in a report.

The report also noted that unlike China, the current growth in India is not supported by rampant credit creation.

"Credit growth has averaged 9.8 per cent in the last two years, almost in lockstep with 10.2 per cent nominal GDP growth, underscoring sustainability," it said.

According to Crisil, structurally positive steps have been taken such as mending the electricity and banking sectors, but they remain "work in progress".

"The focus on quality of growth with reform initiatives means there will not be significant upsides immediately," Crisil Chief Economist Dharmakirti Joshi said.

"But if relentlessly implemented, they will do more to raise the trend growth rather than cyclical growth that we are seeing now. We believe this will remain a work in progress for some more time and the momentum needs to continue," he said.

However, Joshi added that the government needs to create 6,00,000 jobs a month but is falling short of target.

"Food processing and textiles are two sectors where maximum job creation is possible," he said.

Crisil has estimated the GDP to grow at 7.9 per cent in the current financial year, provided the monsoon is normal and the global situation does not deteriorate.

Last month, the government had announced a Rs 6,000-crore package for the textile sector, which envisages billions of dollars investment over the next four years leading to an intended generation of new jobs to the tune of 10 million.