India's GDP growth is expected to slow down to 7.1 per cent in the current fiscal mainly due to slump in manufacturing, mining and construction activities in figures which do not take into account the possible impact of demonetisation.
Given the current scenario, India Inc is pinning hopes on a growth-oriented Budget to unleash investments and set the pace for economic growth of 8 per cent and above in the near future.
The industry said policymakers should take doable steps to revive fixed investments and production of capital goods which are falling continuously, and urged the government to unveil policy initiatives to unclog the cash flows in large projects.
The 'First Advance Estimates of National Income, 2016-17' released by the Central Statistics Organisation (CSO) do not reflect the impact of demonetisation, effective from November 9, 2016 because the estimates are based on sectoral data available till October.
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Industry body Assocham said further downward risks to growth still prevail in the form of continuous fall in fixed investments and index of industrial production, unsolved problem of bank NPAs in India, political risks in the euro area and the UK, emerging geo-political risks and the spectre of financial market volatility.
"In addition to this, rising crude oil prices will adversely affect the current account deficit and exchange rate and unpredictability in the Indian economy due to recent policy stances and announcements on demonetisation and other related factors could adversely impact the GDP," it said.
The CSO projections on national income are in line with the Reserve Bank's estimates, which too had lowered the GDP growth prospects to 7.1 per cent.
"ICRA expects GDP and GVA growth for FY2017 at 6.8 per
cent and 6.6 per cent, respectively, appreciably lower than the Advance Estimates.
"Given the unfolding trends, we expect actual FY2017 growth to be lower than the Advance Estimates for sub-sectors such as manufacturing, agriculture, electricity and construction," Aditi Nayar, Principal Economist at ICRA said.
"We hope that this rate cut cycle will be carried forward to further accelerate the pace of growth. We also look forward to reduction in tax rates and further policy push to support demand and investment in the upcoming Budget," Ficci President Pankaj Patel said.