The market will be depending upon the external factors and risks, which has been risen over the past several months, according to the recent Moody’s poll being conducted along with its Indian affiliate ICRA which was being conducted in Mumbai during mid-January 2016.
According to Rahul Ghosh, a Moody’s Vice President and Senior research analyst the market participants which were being surveyed were more concerned about the potential spill over in the India’s growth story of external risks which includes tightening of Interest rates in the US along with the China’s ongoing slowdown.
The report being presented discusses the results from the real-time polls being conducted during the Moody’s and ICRA India Outlook Conference being conducted in Mumbai on 13th January 2016. This event brought together the country’s largest investors, intermediaries and issuers, with 110 market participants being attending. Over the questions being raised by Moody’s and ICRA, the results of the Moody’s poll were being like this:
- Greatest risk to India’s macroeconomic growth over the next 12-18 months – 35% found the external shocks as the greatest challenge, which is up from the previous 10% in Moody’s and ICRA poll being conducted in May 2015.
- Largest threat to India’s GDP growth – 32% found that the sluggish reform momentum will be responsible, which is being down from 47% in May 2015. 19% said that infrastructure constraints were the most important factor.
- India’s economic growth rate for next 12 to 18 months – More than three quarters of those being surveyed said that the GDP growth will stay in-between 6.5% and 7.5%. Only 14% participants expected the growth to reach in-between 7.5% and 8.5%. This result being down from 36% in May 2015. Moody’s projects the real GDP growth to 7% in the fiscal year ending 31st March 2016, rising to 7.5% in the subsequent year.
- Asset quality of Indian Banks – In this case the market participants poll were being split into whether the government initiatives will help in improving the bank’s asset quality. 40% being expecting a reduction in the weak assets in the upcoming 12-18 months. 45% of them believed that the asset quality is being unlikely to improve.
- Key driver of credit conditions for companies in India over next 12-18 months – 50% respondents polled that the policy implementation will represent the credit condition for companies in India. 21% said that the external risks will constitute the external driver.
- Private sector Investment growth – Only 58% of those surveyed said that such growth will recover only gradually, until mid-2017.
The report points out that Moody’s has changed its outlook over the banking of being stabilized from being negative, due to Moody’s expectations that a gradually improving the operating environment will result in slower pace of problem loan creation and as a result, the credit matrix of Indian banks will gradually stabilize.
Looking at the Moody’s poll one can judge that India is on right track but still many things are lagging which needs to be covered up with good policies and proper policy implementation.