India: Broadly positive economic outlook - TDS

Mitul Kotecha, Senior Emerging Markets Strategist at TD Securities, points out that the official mood in India is broadly positive with regards to economic health led by a robust growth outlook and potential for a higher growth plain.

Key Quotes

“There is a major push on the ground amid a “new economic paradigm” to broaden GDP growth, driven by the states.”

“Policy is increasingly being driven towards improving the jobs market, as it has lagged behind the growth recovery.”

“The current account deficit continues to remain a point of vulnerability but the drop in oil prices has been welcomed. Measures to improve capital inflows are being strengthened.”

“Hopes that strong direct tax collection will keep the fiscal deficit in target are high but risks of a breach of the target remain.”

“Officials think that India will be a beneficiary of the trade war but realise that the country has a long way to go to move up the value chain.”

“Expectations of rate hikes have receded and with a (now) new central bank governor in place expectations of cuts may grow.”

“There is now less room to receive rates but the bond market outlook remains positive. INR depreciation is likely to be more gradual in the months ahead.”