CHENNAI: A slew of ratings agencies and international bodies issued varied growth projections for the Indian economy on Thursday. But all of them agreed on one thing. India’s economy was recovering, but growth was dependent on rainfall, global uptick and spending towards the 7th Pay Commission.
Goldman Sachs projected growth of 6-7%, while the UN Economic and Social said it will expand by 7.6% in FY17 and accelerate to 7.8% in FY18, primarily driven by domestic consumption demand. India Ratings, however, revised downwards its estimate to 7.7% from 7.9% for this fiscal owing to weak industrial growth. According to the UN report, private investment was down and out due to lack of demand, sub-optimal capacity utilisation and cheap imports in select cases. “A sustained decline in inflation and monetary easing would help consumption demand to revive further in FY17,” it added.
Ratings agencies also were of the view that at least one more (25 bps) policy rate cut by RBI was in the offing this fiscal and a faster monetary transmission as banks move to marginal cost-based lending rate.
Anubhuti Sahay, Head, South Asia Economic Research (India), Standard Chartered Bank India, said GDP growth may be weaker than expected if rains disappoint or global growth slows down.