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India to grow 6.5-7.5% over 12-18 months: Moody’s

India’s GDP growth will remain in the range of 6.5-7.5 percent over the next 12-18 months and GST will support the momentum for faster growth, a Moody’s poll said on Monday.

More than 75 percent respondents said exposure to large corporates in power, steel and infrastructure sectors poses as the greatest risk to banks’ asset quality in India.

Over 200 market participants, polled by Moody’s and its affiliate ICRA, were confident of India’s stable economic growth prospects.

“India’s GDP growth rate will remain in the range of 6.5 -7.5 percent over the next 12-18 months, according to more than 60 percent of the respondents,” Moody’s said in a statement.

The view is in keeping with signs of economic recovery after the short-term negative impact of demonetisation.

According to the estimates of the US-based agency, the economy will grow 7.5 percent in 2016-17 and 7.7 percent in 2017-18.

Moody’s believes that economic growth will gradually accelerate to around 8 percent over the next 3-4 years.

“Given economic and institutional reforms in India and further changes that could follow, India will likely grow faster than similarly rated peers over the next 12-18 months despite a short-term drag caused by demonetisation,” Moody’s Associate Managing Director Marie Diron said.

While the respondents believed that introduction of the Goods and Services Tax (GST) will support faster growth in the next 12-18 months, they were split on how much of a growth boost the tax reform will provide.

The poll found that asset quality risks linger for banks and credit growth will remain subdued.

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