Indian economy to be more stable, attractive: KPMG

The government is committed to bringing fiscal deficit to 3% by the financial year 2017-18. The Indian economy is expected to become even more resilient, thus giving sufficient operational comfort to investors The Dollar Business Bureau

The push given by the government on innovation and startups will also add to the growth of the Indian economy

India shall continue to evolve into a more attractive and stable investment destination - leading business consulting firm KPMG has said in its report, citing reasons such as favourable macroeconomic conditions, a prudent fiscal policy, responsible government spending and a pro-reform government. “At a time when the global economies are facing headwinds, India is moving on a higher economic growth trajectory,” KPMG said in its report titled ‘India Soars High’ released during the ongoing Make in India Week in Mumbai. The report also praised India’s decision to increase connectivity to its neighbouring countries and said connectivity projects such as the Amritsar– Kolkata Industrial Corridor (AKIC), Bengaluru–Mumbai Economic Corridor (BMEC), Chennai–Bangalore Industrial Corridor (CBIC) and Delhi– Mumbai Industrial Corridor (DMIC) to the neighbouring South Asian and South-East Asian economies will not only integrate India with these economies but also help the country become the epicenter of an economic structure. “The process of tighter economic integration with neighbouring economies has started off with initiatives such as the South Asian Association of Regional Cooperation (SAARC), Bangladesh, Bhutan, India and Nepal (BBIN) initiative, BBINMotor Vehicle Agreement, Kolkata-Dhaka-Agartala bus service, transnational inland water-ways with Bangladesh, road agreements with Association of Southeast Asian Nations (ASEAN),” the report detailed. Six of the nine Asian Highway (AH) projects pass through India – which is further poised to leverage India’s strategic location as an economic hub. India’s coastline infrastructure is also being strengthened to support regional coastal shipping. Therefore, investors based out of India will have easy access to a market size that is much larger than the 1.3 billion people in India and an economy that is larger than the $2 trillion Indian economy. The report also credited the government’s recent reform measures which had been taken to support India’s long-term growth potential. It said that while the reduction in the current account deficit on the back of falling oil prices enabled the RBI to increase foreign exchange reserves, which could act as a cushion against external shocks, inflation remained benign and is likely to be anchored by the inflation targeting mechanism. “The government is committed to bringing the fiscal deficit to 3% by the financial year 2017-18. The Indian economy is expected to become even more resilient, thus giving sufficient operational comfort to investors,” the consulting body said. The government has announced intentions of mobilising more investments towards urban development. Among its many proposed initiatives, the government has announced its intentions to create a comprehensive National Energy Policy, enhance sector-wide efficiency, and improve the quality of energy infrastructure and technology. “These initiatives will start bearing fruit in the coming years. The push given by the government on innovation and startups will also add to the growth of the economy. The government has put together a fund of funds the ‘India Aspiration Fund’, to support the startup ecosystem in India. These initiatives will pay off and contribute to the growth in the economy,” it said. The initiatives have somewhat started to give positive signals to the foreign investors. Foreign Direct Investment (FDI) has picked up by about 13% to $16.63 billion during the first half of 2015-16 from $14.69 billion during the corresponding period of 2014-15.

February 15, 2016 | 05:20pm IST

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The Dollar Business Bureau - Feb 15, 2016 11:41 IST

Indian economy to be more stable, attractive: KPMG

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