Most macro indicators in Indian economy have been improving since early 2014. However, a recovery in private capex is asbent, partly reflecting large and persisting idle industrial capacity. Accordingly, euphoric expectations of a sharp improvement in growth a year ago are now giving way to more nuanced optimism.
Nevertheless, the government has made significant progress during its first year in office, avoiding quick fixes for the economy, while pursuing reforms in areas of key long term priorities, such as natural resource allocation, structural reduction in fiscal subsidies, financial inclusion, labour laws, and ease of doing business, supporting the long-term constructive outlook, says Barclays.
Several key economic sectors have been liberalised for foreign direct investment (FDI) in the past year - eg, defence manufacturing, railways and insurance - which can potentially attract large investments over time.
The country posted a robust growth rate of 7.0% y/y in Q2 2015 and expected to grow at 7.8% in FY 2015-16, says Barclays.
