India's growth to exceed 7.3% in FY16

Growth would come despite Jaitley noting that rural demand had been impacted by lower rains in the last two years

India’s economic growth is expected to exceed 7.3 per cent in the current financial year and the government would try to convince opposition parties to pass a blocked tax reform, Finance Minister Arun Jaitley said on Monday.

“The Indian economy is expected to grow better than 7.3 percent — the level achieved last fiscal year — and even at a higher level next year,” Jaitley told investors at an Arab-India Economic Forum meeting in Dubai.

Economic growth, Jaitley said, would come despite weakness in rural demand due to poor rainfall in the last two years. A drought has also caused shortages that have led to a spike in prices of pulses and vegetables.
 

India’s retail inflation surged to a four-month high in October and industrial production grew at a slower-than-expected pace in September, latest government data shows.

In a bid to speed up growth, India last week eased foreign direct investment norms in 15 major sectors, including mining, defence and civil aviation.

But foreign and domestic investors are worried the government’s reform agenda could face renewed political opposition after Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) lost a key state election this month.

In an apparent bid to calm such fears, Jaitley said he would persuade opposition parties to pass a business-friendly goods and services tax, that could add up to 2 percentage points to gross domestic product but is blocked in parliament.

“To convince the opposition is top priority,” Jaitley said.