"Growth in the index of industrial production is expected to gain strength as the unfavourable base effect wanes. The government's efforts to de-bottleneck investment coupled with early signs of pick-up in urban demand would also support production," said Dun & Bradstreet in the report.
"D&B expects IIP to have grown by 4-5 per cent during December 2015."
WPI inflation, according to the analytics firm, is likely to be near 0.5 per cent and CPI inflation in the range of 5.8- 6 per cent in January 2016.
For December 2015, WPI deflation stood at around 0.73 per cent as against 1.99 per cent in November 2015.
The savings in subsidies and increase in revenue through a tax hike, the Dun & Bradstreet report said, are not likely to keep fiscal deficit in check if the government decides to increase expenditure to support investment.
It suggested that rising bad loans in the banking system, soaring food inflation, subdued rural demand and supply side management after two consecutive years of rain deficit will have to be managed effectively by the government.