India to benefit from lower commodity price cycle: Kotak

In his blog, Uday Kotak, Executive Vice-Chairman and Managing Director of Kotak Mahindra Bank, speaks on the country's business outlook in 2015.

Global Scenario: I am truly excited about India, its future and Kotak. However, I need to step back and discuss with you significant changes in the world. The most important of those is the dramatic change in commodity prices, particularly oil and energy. We have seen a drop of more than 40 percent and this changes the dynamics for the world. We are also seeing the world being a one-engine game – the US economy, which is progressing well but other countries, whether it is Germany in Europe or Japan have significantly slowed down. China too is not firing at the pace it did earlier. Therefore, in a world where we are seeing significant deflationary pressures, it brings pressures on growth worldwide.

2015-Phenomenal growth opportunities for India: In this context as I look at 2015, I think India is going to benefit from a slower commodity price cycle in its macroeconomic aspects. India's current account numbers, inflation and fiscal deficit will overtime benefit from these global factors. Macroeconomic India, therefore, looks better. But at the same time, due to deflationary pressures, it will be difficult for India to pick and increase its growth momentum. I am of the view that for the year ending March 2015, India's GDP growth should be around the 5.3 percent mark, and I would be delighted if in March 2016, that is at the end of the following financial year and thereafter, India moves closer to 6 percent growth. India has to do a lot more in terms of its structural acts to get the growth engine firing faster. It is here I feel that we have a very significant challenge and opportunity as a country in front of us in 2015. At the same time, I am genuinely of the view that the Indian marathon is playing its way. I see India having a phenomenal future for the next decade.

Also Read: Drivers of eco recovery in 2015 - Reforms, rate cut: Kotak

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