India’s GDP likely to expand 7.9% in FY'17: Ind-Ra
Driven by factors like focus on ‘make in India’ and improving ease of doing business, India’s gross domestic product (GDP) is likely to expand by 7.9% in the next financial year, more than 7.4% in the current fiscal, India Ratings and Research (Ind-Ra) has projected. The country’s all three broad production sectors—agriculture, industry and services— are expected to grow in FY17, although gradually. “This will make India the fastest growing major economy in the world”, the agency said. “While agriculture might get a boost from a normal monsoon in 2016, industry will benefit from (i) various announcements made in the FY15 and FY16 budgets to address the structural issues plaguing industrial/infrastructure sector, (ii) focus on ‘Make in India’ and (iii) improvements in the ‘ease of doing business’,” it said. About international trade, the agency said that a benign global GDP/trade has adversely impacted exports so far, and the country’s inbound as well as outbound shipments will further contract during the current financial year. However, “Ind-Ra expects them to return to growth in FY17”. The agency also expects the current account deficit to widen further to $28.6 bn (1.3% of the GDP) in FY17 from $20.1bn in FY16 (1.0% of GDP). “Despite uneven foreign portfolio inflows, capital account is likely to remain comfortable and adequately finance the current account deficit. This will help the rupee trade at an average 67.5/$ in FY17,” it projected. Ind-Ra expects the country’s industrial GDP to grow 7.6% in FY17, while that of agriculture sector at 2.2% and services sector at 9.5%. Commodity prices are expected to remain soft even in FY17, while the Wholesale Price Index and Consumer Price Index inflation is estimated to be at 2.7% and 4.9%, respectively. If all the macroeconomic data remain stable, the agency said, up to 50-basis point cut in policy rate is possible by the end of FY17.
January 19, 2016 | 1:30pm IST