While the Modi government is creating enablers for growth by addressing policy paralysis, it cannot push demand up in the short term, according to credit rating agency Crisil.

The policy paralysis is being addressed via energising the bureaucracy, fast-tracking decision-making, and enhancing the ease of doing business, said the agency in its report ‘Modified Expectations’.

The report, which is an evaluation of the performance of the Narendra Modi-led government as it completes one year in office, observed that there is no monetary and fiscal bazooka at hand either – which is also because of the legislative mandate to bring down fiscal deficit. And monetary policy turned mildly favourable only this year.

“In other words, there is little that can be done to engineer a quick revival in demand. That’s exactly why corporates are shy of undertaking fresh investments…We see private corporate investments picking up only in fiscal 2017,” said the report.

This lack of demand is also reflected in low utilisation of capacities, it added.

“Net-net, we believe demand will pick up only slowly. And as is the typical progression in such a milieu, consumption demand will improve first, which then will trigger investments,” the report explained.

Crisil expects GDP growth to grind up to 7.9 per cent, inflation to come down to 5.8 per cent and current account deficit at 1 per cent of GDP in fiscal 2016, given a normal or near-normal monsoon.

PTI adds: Crisil’s Chief Economist DK Joshi further said: “In the first year of the government, the macro indicator has turned green, growth-inflation mix improved, the current account deficit is in check, which is a result of good policies, and one of the major gains is on the inflation front, which has eased.”

He also added expectations from the Narendra Modi-led government have moderated in its first year, as it was not able to push demand due to the issues it inherited.

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