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India Ratings, a Fitch group company, projected the country’s economic growth at 7.7 per cent this financial year.
The Union Budget assumes 8.5 per cent growth for 2015-16. The Reserve Bank of India’s estimate is 7.8 per cent. And, 7.5 per cent is what was pegged by both the International Monetary Fund and the World Bank.
The government’s Economic Survey said growth in 2014-15 would be in the range of 8.1-8.5 per cent.
While the growth would be boosted by higher domestic consumption, demand abroad will remain lacklustre, India Ratings said. It projects industrial growth to be 6.5 per cent in 2015-16 against 5.9 per cent in FY15.
“Although external demand still looks fragile, domestic demand will gather momentum in view of lower inflation. Soft commodity prices, in combination with a policy/regulatory push and decline in interest cost, are likely to drive industrial recovery in FY16,” India Ratings said.
A sustained government focus on ‘Make in India’ and on improving the ease of doing business could be another positive for industrial recovery, it said, albeit in the medium to long run.
“Successful auction of the coal mines cancelled by the Supreme Court in FY15 has brightened the mining sector outlook. (We) expect all three broad sectors — mining, manufacturing and electricity — to contribute to industrial growth,” the rating agency said.
However, it expects growth in services to reduce to 9.9 per cent from 10.6 per cent earlier. Financing, insurance, real estate and business services might grow at 11.2 per cent, lower than FY15’s 13.7 per cent.
Assuming the monsoon to be normal, it expects agricultural growth to be 2.1 per cent, against 1.1 per cent expected in 2014-15.
