India is well placed for a cyclical recovery in 2015 and 2016 as (1) it is benefiting substantially from the lower oil price, (2) improving external and domestic balances have left room to ease both fiscal and monetary policy and (3) India has a relatively strong government that, at least to some degree, has sped up structural economicreforms. India's GDP growth could exceed 7% in coming years.
The general election last year gave the main opposition party BJP an outright majority in the Lower House. Hence, compared with the past two decades, India has a relatively strong government with substantial political room to accelerate economic reforms.
Danske Bank notes its forecasts as follows:
India's current account deficit has declined markedly to around 2% of GDP and should decline further due to the recent sharp fall in the crude oil price.
Due to the sharp improvement in the current account, we no longer regard India as among the 'fragile' emerging markets.
