Country Forecast India March 2018 Updater

Country Forecast India March 2018 Updater

  • March 2018 •
  • Report ID: 5355292 •
  • Format: PDF


  • The National Democratic Alliance (NDA, a centre-right, pan-Indian coalition of parties led by the Bharatiya Janata Party) will retain its dominance over the political landscape in 2018-22. The Economist Intelligence Unit forecasts that the NDA will secure a second five-year term in the 2019 parliamentary polls.
  • India's foreign policy will remain assertive and driven by security concerns in South Asia in 2018-22. The government will also seek closer relations with Japan and the US to counter China's growing influence. India's relationship with neighbouring Pakistan will remain tense, owing to territorial disputes.
  • The pace of progress on enhancing the business environment will be uneven, and especially slow in the run-up to the 2019 elections. Although the government will improve infrastructure, progress on reforming land and labour laws will be slower owing to strong political opposition.
  • Improved tax administration and greater formalisation of the economy will help to boost government tax revenue. However, rising spending on social services, infrastructure and rural assistance will limit the government's ability to reduce the fiscal deficit much further. We expect the budget shortfall to average the equivalent of 3.2% of GDP in fiscal years 2018/19-2022/23 (April-March).
  • Real GDP growth will average 7.9% a year in 2018/19-2022/23, largely driven by private consumption and infrastructure investment. Private-sector investment will accelerate from 2018 as the authorities deal more firmly with distressed assets in the banking system, and as the business environment improves.
  • We expect consumer price inflation to average 5% a year in 2018-22. The Reserve Bank of India (the central bank) will tighten monetary policy in 2018 to keep inflation in check. In 2020 it will cut policy rates in response to weaker global GDP growth, then tighten policy in 2021 as the world economy recovers.
  • The rupee will depreciate in 2018-19, and again in 2021-22, largely as a result of India's persistent inflation differential with the US and a widening current-account deficit. However, the currency will appreciate slightly in 2020 owing to weaker economic growth and a fall in interest rates in the US.
  • Robust private consumption and an increase in investment spending will boost imports of both consumer goods and machinery, leading to a widening of the merchandise trade deficit between 2018 and 2022. Overall, the current-account shortfall will average the equivalent of 2.2% of GDP in 2018-22.


Loading...

We are very sorry, but an error occurred.
Please contact support@reportbuyer.com if the problem remains.