Crisil Says India a Better Prepared Economy

Asia’s third largest economy, India is well prepared to deal with any eventuality arising out of spike in the interest rates by the US Federal reserve, which is sending a strong signal of rate hike early next year, rating agency Crisil said.

According to Crisil chief economist Dharmakirti Joshi India are better prepared to handle shocks arising out of an expected increase in the US interest rates next year as improvements in current account deficit (CAD), growth-inflation mix, sufficient import cover and steeply falling crude oil prices have put the country on a stronger wicket.

Going forward into 2015, the country will be among a select few economies which will witness rising growth and falling inflation, Joshi added. He said the recent fall in the rupee is on account of increased domestic demand for the dollar and global uncertainty. He expects the rupee to likely appreciate once global volatility comes off.

He said fall in crude prices is a net positive for the domestic economy, which is likely to clip to over 6% in FY16 versus around 5% this fiscal, he said adding, "steps to improve policy decision making and clear infra bottlenecks would gradually lift growth." The rating agency sees a high probability of an interest rate cut by the Reserve Bank in first quarter of the next fiscal.