Country Economic Forecasts > India

Dr. Urjit Patel takes over as RBI Governor amid rising inflationary pressures. While the latter have been primarily driven by an unexpectedly large increase in food prices, other factors like unfavourable base effects and higher public sector salaries could delay the return of inflation to the RBI's projected glide path of 5% by early 2017. But we take comfort in the knowledge that Dr. Patel is likely to share Rajan's views on stable and low inflation being key for sustainable growth. To that extent, we do not perceive any risks to our monetary policy 'pause' view from his appointment.Also, our bottom-up analysis of growth suggests that the economy may have passed its low point. This is, however, not reflected in our top-down forecasts. From a national accounts perspective, we expect growth to moderate going into 2017 because of the outsized role played by 'discrepancies' in driving up growth in the last few quarters. But aside from that, the underlying dynamics point towards a possible improvement in the growth picture, largely driven by consumptionHowever, the risks to the growth outlook remain to the downside, given the ongoing fragility of the global economy.