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The outlook towards the financial condition of the country has taken a positive turn during the first quarter of the ongoing fiscal, a new survey by the Confederation of Indian Industries (CII) and Indian Bank’s Association (IBA) shows.
“There was noticeable improvement in the expectation of banks and financial institutions which is captured in improvement in the funding liquidity index, economic activity index, and the external financial linkages index,” the report said.
The CII-IBA Financial Conditions Index stood at 56.9 for first quarter of 2017-18, as compared to 48 during the previous quarter.
“There is a positive outlook on the growth of Indian Economy which is projected to remain at 7.4 per cent backed by low inflation, fiscal prudence and low deficit. The Finance Minister has also stated that growth rate between 7-8 per cent is absolutely normal for the Indian economy given the current global environment,” the report said.
The report has further lauded the Goods and Services Tax (GST), which will be implemented in July. It said GST was expected to “transform the economy by enabling greater transparency, accountability and widening of the tax net.”
Following the “modest setback” from the demonetisation move, the economy has successfully remonetised itself and has since moved towards a less cash trajectory along with increase in tax compliance, the report said.
“Additionally, there have been unprecedented thrust on digitisation of the financial sector by the Government along with strong private sector participation. This has translated to positive economic trends and will improve net worth of financial assets, which will benefit intermediaries such as banks, NBFCs, microfinance and digital money operators. Further, discretionary consumer demand held back by demonetization is expected to bounce back in FY 2017-18,” it said.
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