Rating Upgrade, 7% Growth Rate Not Far off for India: Citi

By Religare
Subscribe to GoodReturns
For Quick Alerts
For Daily Alerts

    Citigroup said if India continues to surprise in the New Year the way it did in 2014, then there are more upsides on its way which could well be capped by a sovereign rating upgrade by global agencies next fiscal, and it is on course to achieve 7 per cent growth rate, reported PTI.

    "India has surprised in 2014 -- inflation is down more than 500 bps, the rupee has outperformed peers by 4-5 per cent, the equity market is up 35 per cent, bond returns around 13-14 per cent and a very buoyant mood.

    Rating Upgrade, 7% Growth Rate Not Far off for India: Citi
    "We think 2015 could see more surprises due to the ongoing process of macro stabilisation...This could lead to a ratings upgrade," Citigroup India Chief Economist Rohini Malkani said in a year-end report.

    The US brokerage also pegged higher growth in the coming years with 5.6 per cent this fiscal, 6.5 next one and 7 per cent from FY17 onwards.

    Admitting that Asia's third largest economy could face some tailwinds in the New Year, she however said the positives outdo the negatives as India is in for more surprises.

    "We have got tailwinds, but could surprise with quicker disinflation leading to a over 100 bps rate cuts; higher capital flows boosting investments and capital availability; sustained commodity price drops favouring CAD, fiscal and inflation; and a possible ratings upgrade which though not entirely in her hands, could well be in store."

    She said more upsides in 2015 is likely not only due to the on-going process of macro stabilisation but also the Modi Government's thrust on relaxing the land and labour laws and easing capital and enterprise controls.

    "Consequently, while our macro forecasts are unchanged, but if all goes well there is room to surprise: GDP could rise from 5.6 per cent in FY15 to 7 per cent in FY17; inflation tracking RBI's target of 6 per cent and rates lower by 100 bps; CAD under control within 1.5 per cent of GDP through FY17 and fiscal consolidation through revenue and expenditure reforms," Malkani said.


    However, she also listed some "nasty surprises" that the country may face in the form of political risks, as the Government does not have a majority in the Upper House (where key laws may get stuck), bank recapitalisation and asset quality, geo-political risks and market turbulences due to US Fed hiking rates.

    The report said the ease of doing business needs to improve in India.

    Read more about: citi
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more