Country Economic Forecasts > India

The advance GDP estimates for India paint an optimistic picture, with annual growth rising to 7.6% in 2015/16 from 7.2% in the previous year. This is supported by strengthening private consumption and a pick-up in investment growth to above 5%. On the output side, both manufacturing and services are estimated to have registered strong growth.However, we continue to be sceptical about the pace of growth indicated by the headline GDP figures, which continue to be detached from bottom-up indicators such as industrial production. Notwithstanding such concerns, we acknowledge that India is in a gradual recovery which is likely to turn more broad-based in 2016. Though consumption will remain the primary driver of growth, we expect the contributions from investment and net exports to improve, helped by concerted policy efforts to boost capital expenditure.The risks, however, remain to the downside, especially on the global front. And there is now limited room for macro policy to provide further support to growth.