Macro & Sector Outlook
D&B India Macroeconomic and Sectoral Outlook 2015-16
India to grow by 8.4% in FY16
Dun & Bradstreet’s Forecast:
  • India’s economic growth as measured by Gross Value Added (GVA) at basic prices to grow by 8.4% in FY16
  • Index of Industrial Production (IIP) to gather pace and grow by 6% during FY16, with substantial gains coming from the second half of FY16
  • WPI inflation to edge up to average at 3.7% in FY16 from a moderate growth of 2.0% in FY15
  • Savings rate is likely to remain broadly unchanged at around 31.8% during FY16 from an expected 31.1% in FY15.
  • Investment rate likely to edge up, albeit marginally, to 33.5% in FY16 from 32.7% in FY15.
  • Momentum in the bank credit growth likely to pick up to 12.5% in FY16 from a moderate growth of 9.5% in FY15
  • The 10-year G-sec yield to be at 7.7% in FY15 and further ease to 7.3% in FY16
  • The rupee is likely to appreciate and stand at around 62.20 per US Dollar by end of FY16.
Automobiles
  • Demand for automobiles across the categories is expected to receive a boost, on the back of the expected economic recovery in FY16
  • The Government’s increased thrust on the auto industry through the ‘Make in India’ initiative is expected to further increase foreign investments into the sector
  • The expected improvement in demand for M&HCVs is likely to trickle down to the light commercial vehicle segment
  • Contribution of scooters in overall two-wheeler volumes is expected to continue to increase due to their lower penetration and on the back of new product launches and the recent fall in ownership cost
Pharmaceuticals
  • Factors such as rising healthcare spending, increasing penetration of healthcare insurance and low rural penetration augur well for the sector
  • Exports to the US, currently hit by delayed regulatory approvals, are likely to recover in FY16
  • The Over-The-Counter (OTC) market is expected to record substantial growth in FY16 with pharma companies and chemists increasing their presence in rural markets
  • The medical devices segment will be positively impacted by the Government’s recent move to allow 100% FDI in the segment
  • The decision to waive local clinical trials for select cancer drugs is expected to translate into huge revenues.
Real Estate
  • The much awaited participation from Real Estate Investment Trusts (REITs) and Alternative Investment Funds (AIF) is expected to aid investments in the real estate sector
  • Tier II & Tier III cities are expected to drive demand for residential real estate
  • Government schemes such as ‘Housing for All by 2022’ are estimated to keep up the growth momentum of the affordable housing segment
  • E-commerce, considered as India’s new sunrise sector, is expected to drive demand for commercial real estate.
Metals
  • Expected improvement in domestic growth with fiscal policy gearing to an investment-led growth strategy is likely to improve demand, both domestic and foreign, for the overall metal sector.
  • Favourable policy initiatives to support the metals and mining sector
Textiles
  • Manufacturing infrastructure in the sector to benefit from the Government’s ‘Make in India’ campaign
  • Domestic demand to improve in the coming quarters as economic growth sentiment improves
  • Increasing labor cost in China to impact cost competitiveness of Chinese textile mills in export markets, creating an opportunity for Indian mills
  • Exports to Latin American and Asian countries to increase, so as to offset the slowdown in the European Union region
Banking
  • Credit demand is likely to witness moderate growth in the second half of FY16
  • Asset quality concerns will persist
  • Mid-sized PSU banks could face enormous challenges in raising the required capital
  • Capitalisation profiles of private banks in FY16 likely to be healthy.
Insurance
  • Low penetration offers opportunities for long term growth in the insurance sector
  • Insurance spending on digital technologies is expected to increase going forward
  • The raising of the FDI cap to 49% in the insurance sector will lead to surge in capital flow and insurance penetration
  • The non-life business in India is expected to strengthen on account of likely improvement in economic activity
IT – Business Process Management
  • The domestic market revenue is expected to outperform the export growth in FY16, driven primarily by improvement in macro-economic environment coupled with various new initiatives by Indian government such as launch of ‘Digital India’ program.
  • Disruptive technologies such as SMAC (Social, Mobile, Analytics and Cloud) and growing digitization trend will fuel the industry’s growth in the near future.
  • Cloud represents the largest opportunity under SMAC; is expected to reach between US$ 650-700 bn by 2020.
  • The retail e-commerce market, although presently at a nascent stage, is expected to get bigger in the near future driven by increasing penetration of Internet and increasing usage of smart devices for performing transactions.
Telecom
  • Demand for data services to be higher as telecom providers extend high speed 3G and 4G network to smaller towns.
  • High debt levels in the sector could impact expansion plans drawn out by the telecom players
  • Telecom infrastructure to get a boost from the proposed Government plans to roll out Wi-Fi facility.
  • E-governance initiatives and digitization drive in sectors like BFSI, e-Commerce and retail would increase demand for high speed internet services.
Retail
  • Likely revival in economic activity during FY16 is expected to support consumption of various consumer products and drive the growth story of the Indian retail sector
  • Continued political uncertainty over FDI in Multi Brand Retail is likely to restrict the foreign investment plan of global retailers
  • Industry will continue to witness rapid transformation from “brick to click” format over the next few years on the back of growing Internet penetration and rising usage of high end communication devices available at affordable prices with cheap data services.
  • Retailers to explore Omni-channel approach to remain competitive in retail Industry.
Power
  • Need for enhanced investment for large scale installed generation capacity addition remains to be the key focus area for the power sector
  • Limited fuel supplies and increased dependence on imported coal would continue to remain a key concern area.
  • Focus on augmenting renewable energy generation capacity to further strengthen.
  • Land acquisition for establishment of power plants and substations would continue to pose challenge.
  • The proposed ‘plug-and-play’ model for large infrastructure projects in the Union Budget 2015-16, if implemented would help in faster implementation of projects.

D&B's India Macroeconomic and Sectoral Outlook

Annual projections of selected macroeconomic variables and selected sectors

India appears poised for a momentum in growth. The decisive shift in policy making, a favourable terms-of-trade, easing of policy rate facilitated by benign inflation and inflationary expectations and a fiscal discipline has been setting the stage towards creating a strong macroeconomic foundation. Identifying the new growth centers and taking cognizance of the emerging risks and challenges to be encountered during the current transition phase will be valuable for companies to stay ahead in today's competitive world. In this context, Dun & Bradstreet produces Macroeconomic and Sectoral Outlook which provides forecasts of major macroeconomic parameters over the next fiscal year. This report also elucidates major macroeconomic happenings in the Indian economy during the last fiscal year. It also provides performance and outlook of the major sectors in India.

The publication India Macroeconomic and Sectoral Outlook is broadly divided into the following sections:
  • The Year Gone By
  • India’s Economic Outlook
  • Sectoral Outlook
  • Some Concerns to Growth
  • D&B’s Key Macroeconomic Forecast
Sectors Covered
  • Banking
  • Automobiles
  • Pharmaceuticals
  • Textiles
  • Real Estate
  • Metals
  • Insurance
  • Power
  • IT - Business Process Management
  • Telecom
  • Retail
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