Goldman Sachs Group Inc.'s India economist predicts that India's economic growth would top 6% for the rest of the decade, attracting more Chinese investment into the South Asian country.
In an interview with Bloomberg Television's Haslinda Amin on Friday, Santanu Sengupta stated that the long-term growth potential is likely to "inch higher toward 6.5 percent, or slightly higher." He predicted growth of 6.3% for the upcoming fiscal year, which begins in April, lower than the Reserve Bank of India's expectation of 7%.
India's demographics, strong government spending, and strong domestic demand make it a favorable destination for investments going forward said Sengupta. Potential growth is an assessment of how quickly an economy can grow without producing excessive inflation. Last month, India's central bank governor estimated that the country's potential growth rate was approximately 7 percent.
Goldman Sachs predicts that the private sector in India will increase investments following the national elections. Businesses have aggressively deleverage, and their financial sheets are among the "cleanest that we have seen in India in the last 20 years or so," he added.
More from Sengupta: The Reserve Bank of India is expected to wait for the Federal Reserve to move before modifying monetary policy, he added. The RBI's moves will come in three phases, including alleviating liquidity, a shift in the policy stance, and interest rate decreases.
- Goldman predicts two rate cuts in India in the second half of the year. - If the economy is weaker than predicted, the Reserve Bank of India may need to lower interest rates more quickly and deeply.
