Goldman Sachs Group Inc.’s India economist predicts that India’s economic growth would top 6% for the rest of the decade, attracting more Chinese investment into the South Asian country.
In an interview with Bloomberg Television’s Haslinda Amin on Friday, Santanu Sengupta stated that the long-term growth potential is expected to “inch higher toward 6.5 percent, or slightly higher.” He predicted growth of 6.3% for the upcoming fiscal year, which begins in April, lower than the Reserve Bank of India’s expectation of 7%.
India’s demographics, strong spending by the government, and strong domestic demand make it a “favorable destination for investments going forward,” he stated.
Potential growth is an assessment of how quickly an economy can develop without producing excessive inflation. Last month, India’s central bank governor estimated that the country’s potential growth rate was approximately 7 percent.
Goldman Sachs expects that the private sector in India would accelerate investments following the national elections. Businesses have aggressively deleveraged, and their financial sheets are among the “cleanest that we have seen in India in the last 20 years or so,” he added.
Here is more from Sengupta:
- The Reserve Bank of India is expected to wait for the Federal Reserve to move before adjusting monetary policy, he said, adding that the RBI’s actions will come in three phases, including easing liquidity, a change in the policy stance followed by interest rate cuts
- Goldman expects two rate cuts in India in the second half of the year
- If the economy performs weaker than expected, the RBI may be forced to cut interest rates faster and deeper.
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