Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Politics / Policy/  Which way is the Indian economy headed?
BackBack

Which way is the Indian economy headed?

While the IMF and ADB have projected the Indian economy to slow down in FY17, many other agencies claim otherwise

The IMF on Tuesday trimmed India’s GDP forecast for the current financial year ending 31 March 2017 to 7.4% from 7.5% projected earlier, blaming sluggish recovery in private investment. Photo: MintPremium
The IMF on Tuesday trimmed India’s GDP forecast for the current financial year ending 31 March 2017 to 7.4% from 7.5% projected earlier, blaming sluggish recovery in private investment. Photo: Mint

New Delhi: While the International Monetary Fund (IMF) and the Asian Development Bank (ADB) have projected the Indian economy to slow down in 2016-17 from last year’s economic growth of 7.6%, many other agencies claim that the economy is accelerating.

The IMF on Tuesday trimmed India’s gross domestic product (GDP) forecast for the current financial year ending 31 March 2017 to 7.4% from 7.5% projected earlier, blaming sluggish recovery in private investment.

“In India, economic activity remains buoyant, but the growth forecast for 2016-17 was trimmed slightly, reflecting a more sluggish investment recovery," IMF said in an update to its World Economic Outlook.

The ADB on Monday retained its earlier projection of 7.4% GDP growth for India for 2016-17, maintaining that the Indian economy has shrugged off global headwinds and will be supported by brisk consumer spending and an uptick in the rural economy.

However, Fitch Ratings on Monday, while reaffirming India’s sovereign ratings at the lowest investment grade of BBB- with a stable outlook, projected the economy to accelerate slightly to 7.7% in 2016-17, resulting from an expected pick-up in consumption in both urban and rural areas after a wage hike of 24% for Central government employees and the strong likelihood of stronger rainfall than in the previous two poor monsoon years.

Goldman Sachs also raised its growth projection for India to 7.7% for calendar year 2016, holding that the recovery in growth is broad-based, driven by public capex and foreign direct investment, and since March quarter consumption is also showing early signs of recovery.

Crisil chief economist D.K. Joshi, who sees the economy picking up and poised to grow at 7.9% in 2016-17, said a boost from farm output on the back of a normal monsoon is expected to be the swing factor this year. “Like IMF, we also expect private investment to remain sluggish. But that will be compensated by pick-up in private consumption and a robust growth in agriculture sector on the back of two consecutive drought years," Joshi said.

However, he contended that economic forecasts are hardly a perfect science and growth could be in the range of 7.5-8%.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 20 Jul 2016, 11:44 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App