Boston, MA -- (SBWIRE) -- 08/30/2012 -- The Indian Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the impact on India's economic outlook of continued fiscal indiscipline.
The report examines how best to maximise returns in the Indian retail market while minimising investment risk, and also explores the impact of the risk of another spike in global oil prices on the Indian consumer and on the ability of producers and exporters to realise returns in the short term.
The report also analyses the growth and risk management strategies being employed by the leading players in the Indian retail sector, as they seek to maximise the growth opportunities offered by the local market.
India comes second (out of seven) in BMI's Asia Retail Risk/Reward Ratings, although it underperforms for Risk.
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Among all retail categories, Mass Grocery Retail (MGR) will be the outperformer through to 2016 in growth terms, with sales forecast to increase by 112.3% between 2012 and 2016, from US$31.45bn to US$66.77bn as India's emerging middle class continues to drive demand for new goods and services, and rural retailing presents expansion opportunities.
In the competitive arena, BMI sees upside potential in the eventual removal of Foreign Direct Investment (FDI) restrictions in multi-brand retail.
Over the last quarter, BMI has revised the following forecasts/views:
- BMI is keeping to its forecast for annual real GDP growth to improve to 7.3% this fiscal year, from an estimated 6.8% in FY2011/12. Our core view is that Indian economic growth has bottomed out, and we therefore expect to see the country posting higher quarterly real GDP growth rates in the fiscal year ahead (FY2012/13, April-March). The crucial part of our expectation for an acceleration of growth hinges on the assumption that monetary policy easing will commence soon. We maintain that India's recovery is unlikely to be V-shaped, and we do not expect a strong enough bounce in overall investment activity.
- BMI expects private expenditure (which makes up the bulk of GDP in the country's national accounts at approximately 60%) to pick up as Indian households find relief from the anticipated lower cost of credit. Furthermore, a drawn-out period of disinflation (our core view) should provide respite to household budgets' purchasing power. Our projection sees average headline inflation falling to 6.6% in FY2012/13 (from an estimated 8.7% in FY2011/12). We expect private consumption growth to rise to 6.2% this fiscal year, contributing 3.9 percentage points (pp) to headline growth.
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