Indian rural economy to remain subdued in 2015-16: Moody's
According to credit rating agency Moody's Investors Service
(MIS), India's rural economy to remain subdued through the fiscal year ending
The analysis was published in the latest edition of Inside
India, a quarterly publication of MIS.
According to the report, rural income growth in India has
been stuck in the mid to low single digits in 2015 to date, well off the 20 %-plus
rates clocked in 2011.
The slower rural income growth is partly the result of
increased fiscal restraint by the central government, that MIS believes is
unlikely to change in the coming quarters.
The publication also includes key takeaways from a number of
audience polls carried out during the first annual Moody's and ICRA India
Credit Conference in Mumbai, that took place in May.
According to the poll results, the consensus view on India's
economic growth prospects is relatively optimistic, very much in keeping with
Moody's baseline scenario of headline economic expansion of 7.5 % in FY-2016.
This forecast represents the highest projection amongst G-20
economies, and provides a key pillar of support for the Baa3 sovereign rating
and positive outlook.
According to MIS, the multi-party, federal democracy in
India underpins a gradual pace of policy implementation.
Plans to cut the country's corporate tax rate to 25 % from
the existing 30 % over the next four years will be credit positive for all Indian
corporates insofar as it will reduce their tax expenses and increase their
competitiveness over the medium term.