India economic growth to top 8pc in 2015-16

MUMBAI: India's economy will grow at a rate of more than 8 percent in the 2015/16 fiscal year while consumer inflation will drop to between 5 and 5.5 percent, a government economic report said.

The report also indicated India can increase public investments and still hit its borrowing targets, while saying the country needed to adhere to its medium-term fiscal deficit target of 3 percent of gross domestic product.

The economic survey is the government's statement of intent. We still need to see how they manage the revenue and expenditure sides in the budget tomorrow.

"But the good thing is that they have confirmed their intent to stick to the 4.1 percent fiscal deficit target for this fiscal (year), and more importantly they have come out with the 3 percent fiscal deficit target for the medium term.

"But what's not clear is how they define medium term; we will have to watch out the budget for clues on that.

"The positive for the market is that there is now a clear scope for big bang reforms, with both WPI (wholesale price inflation) and CPI (consumer price inflation) expected to stay under the central bank's target".

"The survey shows positive numbers on fiscal deficit and GDP. If these targets are confirmed in the budget, expect a rally in bonds and equities.

"Given where crude is, I don't see why RBI can't cut rates. If budget sticks with these numbers of economic survey then I would not be surprised to see a rate cut by the Reserve Bank of India on Monday."

"It basically says the economy is now poised to take off, with key enablers getting into place.

"Triggering an investment-led growth environment should augur well for India's growth trajectory to get on to a higher path.

"The government is not going to be easing its resolve to maintain fiscal consolidation. We anticipate that given the comfort on inflation, measures to boost investment are likely to concretely come on board.

"We expect the Union Budget to maintain a similar underlying theme. We are looking at fiscal deficit projection of 3.6 percent for FY16.