Home / Politics / Policy /  Fitch forecasts India’s GDP growth at 5.6% this fiscal, 6.5% in FY16

New Delhi: India’s gross domestic product (GDP) is expected to grow 5.6% in the current fiscal and further 6.5% in 2015-16, buoyed by strong investments and political certainty, rating agency Fitch Ratings Inc. said on Wednesday.

“The new government has started rolling out a number of policies, which may improve the efficiency of the bureaucracy and strengthen the investment climate," Fitch said.

Fitch expects GDP growth to pick up to 5.6% in FY15 (ending in March) and 6.5% in both FY16 and FY17, the agency said in its global economic outlook report.

“Investment is likely to rise now that political uncertainty has disappeared since the new government came to power last May," it added.

RBI has projected a 5.5% GDP growth for the current fiscal and 6.3% for 2015-16.

Fitch further said the expected pick-up is supported by the 5.7% GDP growth in April-June quarter of the current fiscal.

India clocked sub-5% growth in the previous two fiscal years. It grew 4.5% in 2012-13 and 4.7% in 2013-14.

Fitch said lifting GDP growth to substantially higher levels would require large productivity gains through implementation of reforms related to governance, product and labour markets, as well as reduction of infrastructure bottlenecks.

It said India will be the only Bric (Brazil, Russia, India and China) nation where growth picks up in 2014 and further accelerates in 2015 owing to an expected improvement in business environment.

The agency has a stable outlook on India’s ‘BBB-’ rating.

Fitch said in the longer run, a credible low inflation environment would benefit growth by improving the investment environment.

Wholesale price index (WPI)-based inflation fell to a five-year low of 3.74%, while retail inflation stood at 7.8% in August.

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