In our first India Watch of 2016, we outline the prospects for India’s economy over the coming year. The lagged effect of earlier policy loosening and weakness in global commodity prices should provide a small boost to economic growth this year. However, with domestic price pressures building, there is little scope for further policy stimulus. What’s more, given that a number of important state elections are due to take place within the next six months, we doubt that the Modi government will have much appetite to push ahead with necessary but politically-contentious structural reform.
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