'India's growth faces more domestic than global obstacles'

Domestic factors are a bigger constraint for India's shift to a faster growth trajectory than the global factors, CRISIL's chief economist has said.

"Indian authorities' efforts to contain its high fiscal deficit and inflation limit its ability to generously use counter-cyclical policy tools to boost the economy," said CRISIL's chief economist Dharmakirti Joshi in an article published by Standard and Poor's. CRISIL is a subsidiary of Standard and Poor's.

"Weak demand, low capacity utilisation and high leverage are impediments to reviving the private corporate investment cycle," he added.

The report notes that global developments since 2014 have had mixed impact on India.

While lower crude oil and commodity prices have helped to rein in fiscal and current account deficits and inflation, slack global growth has hurt India's exports.

Reforms aimed at enhancing financial sector access to the unserved and under-served, improving transparency in government decision-making and making it easier to do business will play an important role in pushing growth up over the next two to three years, according to the report.

The transition to a sustainable high growth path over the next decade will also require additional reforms such as goods and services tax, along with land and labour reforms.