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Improving business sentiment propels India

Improving business sentiment propels India

Aparna Dutt Sharma, Chief Executive Officer, IBEF

Jul 28, 2014 5:12 PM

In its latest World Economic Outlook report, the International Monetary Fund (IMF), has cut the global economic forecast for 2014 by 0.3 per cent to 3.4 per cent. Some of the downside concerns that have been highlighted for the second half of the year include rising geopolitical risks leading to rising oil prices, financial market risks and a reversal of recent risk spread and volatility compression. Some of the major emerging economies of the world are likely to face the continued adverse effects of supply side constraints and tightening of financial conditions.

India's economic outlook, however, is looking relatively better in the coming quarters as compared to other large emerging economies. In its outlook for BRICS economies (Brazil, Russia, India, China and South Africa) in 2014, India is the only economy for which IMF has retained its growth projection for the year at 5.4 per cent. On the other hand, Brazil, Russia, China and South Africa have received downgrades in growth projections by 0.6 per cent, 1.1 per cent, 0.2 per cent and 0.6 per cent respectively. For 2015, IMF projects India’s GDP growth to accelerate further to 6.4 per cent.

The recovery in business sentiment has been especially strong after the elections this year leading to the formation of a stable government at the centre. The index of industrial production (IIP) also rose by 4.7 per cent in May 2014, the highest growth recorded since October 2012. Moving forward, India is expected to post higher rates of growth.



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