A lower middle-income economy with above-average growth prospects. India's economy continues to achieve impressive growth rates despite more difficult external conditions. We expect the economy to continue to outperform its peers on the back of rising domestic demand and strong demographics. The 2019 elections will be an important test for the Narendra Modi-led BJP government, which has implemented important reforms such as the Goods and Services Tax (GST). India's fiscal and debt metrics remain weak, while its strong external position counters vulnerabilities posed by its current account deficit. Persistent central and state level deficits will continue to check the pace of general government fiscal consolidation. We expect only gradual progress in addressing elevated fiscal deficits and indebtedness. Although India's current
