India Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
×

Sign up to download the India Country Risk Report

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.

Thank you for your interest

You will shortly receive your free executive summary by email.

India Country Risk Report
Product Price
$1,195.00

Indian Government To Continue Improving Business Environment

Core Views

  • The Indian government led by the Bharatiya Janata Party has initiated various reforms in its first two years in office, and it will continue to enact incremental rather than big bang reforms over the coming years. That said, the lack of majority in the Rajya Sabha, India's 245-seat upper house, will remain a hurdle to the implementation of large-scale reforms. State elections, which will continue to take place over the coming years, will determine whether the BJP will attain an upper house majority.

  • We remain broadly constructive on the Indian economy, and it will become the fastest growing major economy in Asia owing to the government's pro-business initiatives and accommodative monetary policy by the central bank. We expect the country's manufacturing and services sectors to continue to perform strongly. However, weakening agricultural growth and slowing reform momentum, notably in the infrastructure sector, will weigh on overall economic growth, and we maintain our FY2015/16 (April-March) and FY2016/17 real GDP growth forecast of 7.3% and 7.2%, respectively.

  • The Reserve Bank of India (RBI) reduced its repurchase (repo) rate by 25bps to 6.50% at its April 5 monetary policy meeting, and we forecast the central bank will cut its benchmark policy rate by an additional 25bps to 6.25% by the end of FY2016/17 in a bid to provide continued support to the economy. The RBI remained dovish, and will continue to seek to improve the transmission mechanism. Subdued inflation in FY2016/17 will provide sufficient room for a reduction in the repo rate.

  • The Indian government delivered its FY2016/17 (April-March) union budget on February 29, sticking to its fiscal deficit targets of 3.5% of GDP in FY2016/17 and 3.0% in FY2017/18, which we believe is positive for macro-stability. That said, we forecast the central government's fiscal deficit as a share of GDP to come in at 3.7% in FY2016/17, as headwinds to revenue expansion and expenditure reduction are likely to persist.

  • The Indian rupee will depreciate gradually against the US dollar over the coming years, and we forecast the unit to average INR68.25/USD in 2016 and INR69.50/USD in 2017. The RBI will continue to allow the currency to weaken in order to keep the currency competitive against its regional peers. However, major rupee weakness is unlikely as continued economic growth and positive real interest rates will lend support to the currency.

Major Forecast Changes

  • We revised our FY2015/16 (April-March) and FY2016/17 current account forecast to a deficit equivalent to 1.0% of GDP and 0.0%, respectively (from 1.5% and 1.4% previously) as India's external accounts will benefit from still weak global oil prices.

Key Risks

  • Upside Risks To Inflation: While we maintain our expectations for the RBI to cut rates in a bid to reignite credit growth and investment, we note that the potential of elevated levels of inflation could force the central bank to hike rates as it did in late 2013, which will not only pose upside risks to our policy rate forecasts, but also downside risks to real GDP growth. Moreover, should the Bharatiya Janata Party (BJP)-led government fail to gather the support it needs to implement fiscal cutbacks in order to maintain the deficit close to the level in FY2015/16, the elevated levels of fiscal spending will certainly present another source of upside pressure to prices.

  • Downside Risks To Growth: The ongoing reform drive in India will be a key driver of the country's economic recovery. High levels of bureaucracy, combined with vested interests and significant levels of legislative autonomy for state governments, mean that Prime Minister Narendra Modi could struggle to implement key reforms. A lack of progress in these key reforms could weigh on India's growth trajectory.

Macroeconomic Forecasts (India 2014-2017)
Indicator 2014 2015e 2016f 2017f
e/f=BMI estimate/forecast. Source: National Sources, BMI
Nominal GDP, USDbn 2,046.1 2,113.6 2,229.5 2,437.6
Real GDP growth, % y-o-y 7.2 7.3 7.2 6.8
Consumer price inflation, % y-o-y, eop 5.3 5.8 4.8 4.8
Exchange rate INR/USD, eop 63.04 66.15 69.00 70.00
Budget balance, % of GDP -6.9 -6.8 -6.6 -6.0
Current account balance, % of GDP -1.3 -1.0 0.0 -0.2
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Growth Outlook Facing Mounting Challenges
8
TABLE: MANUFACTURING AND UTILITIES POWERING AHEAD
8
GDP By Expenditure Outlook
10
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
11
TABLE: NET EXPORTS FORECASTS
11
Fiscal Policy And Public Debt Outlook
11
Potential Government Wage Increase A Negative For Fiscal Consolidation
11
TABLE: FINANCIAL IMPACT OF SEVENTH PAY COMMISSION RECOMMENDATIONS
12
Structural Fiscal Position
13
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
13
Monetary Policy
14
RBI To Keep Rates Accommodative
14
Monetary Policy Framework
15
Currency Forecast
16
INR: Modest Depreciation In 2016
16
TABLE: BMI CURRENCY FORECAST
16
Outlook On External Position
18
TABLE: MAIN EXPORT AND IMPORT PARTNERS
18
TABLE: MAIN EXPORTS AND IMPORTS
19
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
19
Chapter 2: 10-Year Forecast
21
The Indian Economy To 2025
21
Will Indian Growth Live Up To Expectations-
21
TABLE: LONG-TERM MACROECONOMIC FORECASTS
21
Chapter 3: Political Outlook
25
SWOT Analysis
25
BMI Political Risk Index
25
Domestic Politics
26
BJP's Bihar Loss Negative For Reforms And Equities
26
TABLE: POLITICAL OVERVIEW
26
Long-Term Political Outlook
28
Gradual Reform To Prevail Over The Coming Decade
28
Chapter 4: Operational Risk
33
SWOT Analysis
33
Operational Risk Index
33
Operational Risk
34
TABLE: OPERATIONAL RISK
34
Trade Procedures And Governance
35
TABLE: TRADE PROCEDURES AND GOVERNANCE RISK
35
TABLE: IMPORT AND EXPORT DOCUMENTS
36
TABLE: TRADE PROCEDURES BREAKDOWN
36
Vulnerability To Crime
37
Chapter 5: BMI Global Macro Outlook
41
Global Macro Outlook
41
Unfinished Business In 2016
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
42
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
43
TABLE: INDIA - MACROECONOMIC DATA & FORECASTS
45

Assess your risk exposure in India with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in India with confidence.

Your subscription service includes:

  • Delivery of the report in print and PDF
  • Online access for 12 months
  • The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
  • The ability to export data and graphs from the online report directly into your workflow
  • The support of a dedicated Account Manager to answer any questions you might have about your subscription
  • Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report