Economy to grow at 7.4% this fiscal, says FICCI survey

NEW DELHI: India's economy is set to grow by a robust 7.4 per cent in the current fiscal, backed by the agriculture sector which is estimated to clock 3.5 per cent growth and improvement in the performance of the industry and services sector, according to a report.

However, the economists participating in the Economic Outlook Survey brought out by industry body Ficci have forecast the country's gross domestic product (GDP) growth for 2016-17 to be between 6.6 per cent and 7.1 per cent, with some even anticipating the fourth quarter (January-March) economic growth to be lower than the previous quarter numbers.The third quarter GDP growth estimates released earlier by the Central Statistics Office had reported 7 per cent growth indicating a nominal impact of demonetisation and the estimate for the full 2016-17 fiscal was put at 7.1 per cent.

The survey pegged a median GDP growth forecast of 7.4 per cent for the fiscal year 2017-18, with a minimum and maximum level of 7 and 7.6 per cent respectively. The strong performance expected in the current fiscal may help India retain the title of the fastest growing major economy in the world, ahead of China. The industry and services sector are also expected to grow by 6.9 per cent and 8.4 per cent respectively in 2017-18.The survey noted that India's economy was able to withstand the impact of the demonetisation move on the back of strong macroeconomic fundamentals. The setback was transient and the economy is gradually picking up momentum as the process of re-monetisation gets complete.

The participating economists felt that with the process of re-monetisation almost complete, consumption activity is on the rise and will further build up going forward.Moreover, the Indian Meteorological Department's latest forecast of a sufficient monsoon arriving on time may provide some respite amidst earlier reports of El Nino having a dampening effect this year. Going forward, the economists anticipate prices to remain benign, in line with the RBI's projection put out in the monetary policy statement announced in April this year.

The survey projected a median forecast of 4.8 per cent for the Consumer Price Index in 2017-18 with a minimum and maximum level of 4 and 5.3 per cent respectively. The wholesale price index based inflation rate is projected at 5 per cent in 2017-18, with a minimum and maximum range of 3.6 per cent and 5.9 per cent respectively.

Inflation, based on wholesale price index, slipped to a four-month low of 3.85 per cent in April as both food articles and manufactured items showed cooling in prices. Besides, the consumer price index-based retail inflation fell sharply to 2.99 per cent in April, from 3.89 per cent in March, due to lower cost of food items, including pulses and vegetables that showed a deflationary trend, according to data released last week.

A majority of the economists supported the idea of a Universal Basic Income (UBI) for guaranteeing minimum basic support to the Indian citizens which found a special mention in the Economic Survey 2016-17. The UBI can be an efficient framework which would help reduce poverty and transfer the choice to spend on the individual, while promoting labour market flexibility. However, implementing UBI in a highly diverse country like India will be a colossal task as several challenges could emanate right from picking the beneficiaries to deciding on an acceptable income level and its distribution, they opined.

Sharing their views on the tide of protectionism engulfing the global economy, the economists felt that India needs to focus on implementing reforms, improve the investment climate, enhance hard and soft infrastructure and continue the efforts on tackling the issue of non-performing assets. The latest survey was conducted in March/April and drew responses from leading economists representing industry, banking and financial services sector.