India’s GDP growth likely at 7.7% in FY 2017: FICCI

The government will successfully achieve fiscal deficit target of 3.5% in FY 2017.

The Dollar Business Bureau

Indian GDP growth is estimated to grow at 7.7% for the financial year 2016- 17 as per the Economic Outlook Survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The growth is likely to be supported by the enhanced performance in the agricultural and industrial sectors. After two years of drought, the prediction of good monsoon this year is the main reason behind the positive outlook for this fiscal. 

The agriculture sector is projected to grow at 2.8%, the industrial sector is expected to grow at 7.1%, and the services sector is poised to grow at 9.6% in FY 2017, according to the survey. The forecasts for inflation is based on Wholesale Price Index (WPI) and Consumer Price Index (CPI) at 2.2% and 5.1% respectively for FY 2017. Most of the economists who have participated in the survey believe that the government will successfully achieve a fiscal deficit target of 3.5% in FY 2017.

This is possible due to the positive factors such as good rainfall expectation, increased revenues from direct and indirect taxes, and subsidy rationalisation. It would be more important to realise the target of non-tax revenue collection to achieve the fiscal deficit target to GDP ratio. Receipts from spectrum sales and disinvestment in state-owned assets would also be an important factor. The economy will achieve 7 to 7.75% GDP growth in this fiscal to be able to garner the necessary amount of revenue receipts, the survey said.

There could be setbacks in the form of increased prices of global crude oil which could change the expected growth trajectory of fiscal deficit for this year. To push the economy further, the ongoing capital expenditure such as infrastructure will continue to act as a major factor, the economists said.

Speaking about the banking system, the economists said that though the RBI and the Union government are jointly working to resolve the banking issues, it could take up more time to settle. The passage of Insolvency and Bankruptcy Code Bill is an optimistic initiative to deal with the challenges due to the exit of unviable companies. Easy exit will help in faster winding up process ensuring wider credit options for capital, it said.