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Outlook 2020: India will remain a place with big opportunities, says EIU’s Simon Baptist

India will remain a place with big opportunities, said Simon Baptist, global chief economist at Economist Intelligence Unit (EIU), in conversation with CNBC, as he gave his outlook on the country for 2020.

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By CNBC-TV18 Dec 26, 2019 9:08:23 AM IST (Updated)

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India will remain a place with big opportunities, said Simon Baptist, global chief economist at Economist Intelligence Unit (EIU), in conversation with CNBC, as he gave his outlook on the country for 2020.

“The economy is going to bounce back a bit next year and it’s looking that growth is going to be under 5 percent this year, so 4.9 is EIU’s forecast, but next we probably will see it going north of 6 percent as long as economic policy continue to improve. Therefore, I do see a cyclical rebound,” he added.
“However, that is not going to take away from the social pressures and the conflict between the Hindu nationalism and minorities,” added Baptist.
On inflation, he said, “India’s inflation has generally been timed over the past five years or so. It has come down systematically by 3-4 percentage points.
“Agriculture is a big driver of inflationary prices and what happens to harvest and things like onions. However, as India urbanizes it is not as exposed to as agricultural cycles as it was. India is getting more plugged into international supply chain both as an importer and exporter and that’s moderating somewhat its exposure to the climate cycles,” he mentioned.
According to him, labour market has been the source of India’s growth.
“India is a place where you can get well-skilled workers at very low rates and so hence we see the explosion in the BPO sector and in some sectors like IT and things are counting and research services have all been growing very strongly in India and continue to do so because of the availability of labour,” Baptist added.
He continued: “However, not so much in manufacturing where the regulations are a lot tighter. The challenge I see for India is actually automation; it’s the thing that poses the risk for instability. If sectors like call centers and IT and programming, if those things get more automated—that’s the thing that is going to dry up the bigger source of new middleclass jobs for Indians and that will cause the potential unrest.”

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