HSBC Pegs FY16 Economic Growth Rate In India at 7.4 Pct, Says Reforms Key to Push It Up
HSBC Pegs FY16 Economic Growth Rate In India at 7.4 Pct, Says Reforms Key to Push It Up
BANGALORE: Foreign brokerage HSBC said the country is in the midst of a “credit-less” recovery and policy reforms are the main way ahead to achieve higher growth.
Expressing dissatisfaction with the new way of GDP computation, its country economists, led by Pranjul Bhandari, estimated that the economy would clock a 7.4 per cent growth in FY16, and it would remain stable at the same level in FY17 as well.
“The current experience of the recovery resembles the well-documented ‘credit-less’ recovery phenomenon. During such phases, sectors such as investment, that rely more on external funding, take the longest to revive,” it said.
The over-capacity in multiple sectors, coupled with banks being saddled with bad loans, is adversely affecting new investment projects, it said.
It may be noted that credit growth hovering at higher single digit-figure is one of the slowest in a decade.
On growth, it said that while kick-starting stalled projects and government’s capital expenditure would help, more reforms hold the maximum potential.
“Reforms ultimately continue to be the main driver of higher potential growth for the medium term. In 2016, we expect the government to focus on a few important but relatively non-controversial pieces of legislation such as the GST, Bankruptcy Code and RBI Amendment Bills,” it said.
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