India’s economy is likely to grow at 7.3 per cent in 2019 and 2020, according to Moody’s Investor Service.

India is less exposed to a global manufacturing trade growth slowdown than many other Asian nations and is poised to grow at a relatively stable pace in two years.

The announcement in the interim budget 2019-20 on direct cash transfers for farmers and the middle-class tax relief measures are expected to contribute a financial year stimulus of about 0.45 per cent of the gross domestic product.

The Reserve Bank of India is likely to be able to maintain its current monetary policy stance after some tightening last year. Though the overall strength of the banking system is improving, it remains a constraint on the economy.

However, a complete turnaround of the banking system requires more time amid slower-than-expected resolution of legacy problem loans.

With range-bound oil prices, export growth has outpaced import growth for the last two years. Fiscal spending on infrastructure and the rural economy should continue to support domestic activity, recommends Moody’s.

Moody’s growth estimates are based on the calendar year. India, however, measures its economic growth on the basis of the April-March financial year.

Government spending announced this year is expected to support near-term growth.