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Economy to grow at 7.4% next fiscal: Ind-Ra

business Updated: Feb 14, 2017 17:17 IST
Indian economy

An employee works inside an undergarment factory in Kolkata, India, February 1, 2017. REUTERS/Rupak De Chowdhuri(REUTERS)

The Indian economy is likely to grow by 7.4% in the next fiscal year, India Ratings and Research (Ind-Ra) today said.

“India Ratings and Research expects the gross domestic product (GDP) to grow 7.4% year-on-year in FY18...Ind-Ra, however, has revised down GDP growth estimate for 2016-17 to 6.8% from 7.9%, which is even lower than Central Statistical Organisation’s advanced estimate of 7.1%,” the rating agency said in a statement.

Backed by consumption demand and government spending, the gross value added of the three production sectors -- agriculture, industry and services -- would grow at 3%, 6.1% and 9.1% year-on-year respectively in 2017-18, the agency said.

“While private final consumption expenditure is expected to grow at 8.9%, the government final consumption expenditure is expected to clock 9% growth in 2017-18,” it said.

The rating agency said that it expects the current account deficit to come in at 1% of the GDP in 2017-18 as against 0.9% in 2016-17.

“This will help the rupee trade at an average 69.18 per USD in FY18,” it noted.

Observing that while India is likely to face continued headwinds on the exports front due to the play out of Brexit and the anti-globalisation stance of US President Donald Trump, it pointed out that imports are unlikely to pick up so long as the domestic investment cycle does not revive.

As against the popular perception, Ind-Ra said the main setback to investment growth came from the negative 2.2% growth in the gross fixed capital formation (GFCF) of household sector.

Ind-Ra expects GFCF to grow at 4.9% in 2017-18.

India’s economic growth forecast of 7.4% by Ind-Ra in 2017-18 is on the upper end of the 6.75% to 7.5% band estimated in the Economic Survey.