Indian rural economy to remain subdued in 2015-16: Moody's

Highlights:

  • According to credit rating agency Moody's Investors Service (MIS), India's rural economy to remain subdued through the fiscal year ending March 2016.
  • 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.