India taking 'baby steps' towards economic recovery: D&B

D&N cites positive changes in momentum in certain segments of economy, but says some areas of concern remain

The Indian economy is taking "baby steps" towards economic recovery, while weak private investment activity and deteriorating trade performance remain an area of concern, says a Dun & Bradstreet report.

According to the report, there have been some positive changes in momentum in certain segments within the economy, but some areas of concern remain.

"The easing of FDI norms, power and road sector reforms have laid foundation for long-term sustainable economic growth," Dun & Bradstreet India senior economist Arun Singh said.

A number of stalled projects have been de-bottlenecked and fast-tracked while hopes of a recovery in demand conditions have gathered strength particularly owing to Seventh Central Pay Commission payouts next fiscal, he said.

"Yet, reforms have not come through at the expected pace and that remains the biggest hurdle in the recovery process," Singh said, adding that "the macro-economic imbalances in the form of weak private investment activity and deteriorating trade performance remain an area of concern".

The government has lowered its growth forecast to 7-7.5 per cent for 2015-16 from earlier 8.1-8.5 per cent.

"Going forward, it remains to be seen whether growing public investment can crowd in private investment on a sustained basis", he added.

On inflation, the report said WPI is expected to come in to the positive zone from next month onwards given increase in food inflation.

While the continued weakness in global commodity prices and slow pick up in domestic demand is likely to provide some cushion to CPI inflation, sharp increases in food prices could push CPI inflation even higher.

D&B expects the WPI inflation to be in the range of 0.0-0.5 per cent and CPI inflation to be in the range of 5.8 - 6.0 per cent during January 2016.

Photograph: Alkis Konstantinidis/Reuters