QNB Group: India Reforms to Support Growth after Demonetisation

QNB Group has published its India Economic Insight 2017 report. The report examines the impact of demonetisation and the government’s reform agenda on the Indian economy

Doha, Qatar-Wednesday, March 15th 2017 [ ME NewsWire ]

According to the report,  it is expecting real GDP growth to accelerate to 7.4% in 2017/18 as spending rebounds from the shock of demonetisation; in 2018/19 and 2019/20 growth should fade slightly on fiscal consolidation. Successful implementation of important reforms should support investment growth—for example higher public capital spending and a new harmonised goods and services tax (GST) should increase inter-state trade and attract foreign capital.

Inflation is expected to accelerate to 5.2% in 2017/18 on rising food prices following an exceptionally good monsoon season the previous year and stronger energy prices. We expect inflation to then stabilise at 5.0% in 2018/19 and 2019/20, in line with slower growth in food and oil prices; inflation will remain between the RBI’s range of 4 +/- 2%. Fiscal consolidation is planned to continue with the deficit narrowing from an estimated 6.7% of GDP in 2016/17 to 5.8% in 2019/20

Consolidation will be achieved mainly through current spending restraint, especially on wages and subsidies. Implementation of the GST will raise revenues by increasing the tax base and boosting inter-state trade. Credit growth is expected to reach 8.8% in 2017/18 and 2018/19 and pick up to 9.0% in 2019/20, as confidence improves with the  demonetisation shock fading and bank balance sheets strengthen on a government USD10.4bn capital injection. Deposit growth should slow in 2017/18 to 9.1% and stabilise thereafter, as withdrawal limits imposed during demonetisation are relaxed

Consequently, we expect the loan-to-deposit ratio to decline from an estimated 74.3% in 2016/17 to 73.9% by 2019/20

Other recent QNB Economic Insight reports include China, India, Indonesia, Jordan, Kingdom of Saudi Arabia, Kuwait, Oman, Qatar, Singapore, the United Arab Emirates and Vietnam are available on the QNB Group website. QNB Group operates in more than 30 countries across 3 continents and its economic reports leverage its knowledge of these markets to provided added value for its clients and counterparties.

Disclaimer and Copyright Notice: QNB Group accepts no liability whatsoever for any direct or indirect losses arising from use of this report. Where an opinion is expressed, unless otherwise provided, it is that of the analyst or author only. Any investment decision should depend on the individual circumstances of the investor and be based on specifically engaged investment advice.  The report is distributed on a complimentary basis. It may not be reproduced in whole or in part without permission from QNB Group.


Contacts

QNB Group

Maha Mubarak Ali, +974-449-75704, PR@qnb.com.qa

 





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Sources: Central Statistical Office (CSO), Haver Analytics and QNB Economics forecasts  (Graph: ME NewsWire)

Sources: Central Statistical Office (CSO), Haver Analytics and QNB Economics forecasts (Graph: ME NewsWire)

Sources: Ministry of Statistics & Programme Implementation (MOSPI), Reserve Bank of India (RBI), Haver Analytics and QNB Economics forecasts  (Graph: ME NewsWire)

Sources: Ministry of Statistics & Programme Implementation (MOSPI), Reserve Bank of India (RBI), Haver Analytics and QNB Economics forecasts (Graph: ME NewsWire)

Sources: International Monetary Fund (IMF), Ministry of Finance, Haver Analytics and QNB Economics forecasts
* General government including central and state budgets (Graph: ME NewsWire).

Sources: International Monetary Fund (IMF), Ministry of Finance, Haver Analytics and QNB Economics forecasts * General government including central and state budgets (Graph: ME NewsWire).

Sources: RBI, Haver Analytics and QNB Economics forecasts (Graph: ME NewsWire).

Sources: RBI, Haver Analytics and QNB Economics forecasts (Graph: ME NewsWire).

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