Citi attributes the decline in the GDP growth to a fallout of weak global trend, continuing credit crisis, fiscal profligacy and politics, but adds that lower oil prices and faster structural reforms could boost India’s economic growth.
“The recent spate of bad news, weak global growth, the continuing credit crisis, fiscal profligacy, politics creates downside risk to our GDP forecasts of 7.7 per cent for FY09 and 7.9 per cent for FY10,” a Citi said in its report ‘Global Economic Outlook & Strategy.’
However, we should also watch out for the following factors that might be growth positive: lower oil prices, and faster structural reforms,” it added. Citi noted that inflation pressures “may take time to ease, given the second-round effect.” “Implementation of the announced reform measures such as pensions, insurance, and possible privatisations, would likely improve the fiscal position and ease liquidity conditions,” it said.
