New Delhi: India’s economic growth will accelerate to 8 per cent by 2018-19 fiscal as gradual implementation of structural reforms will contribute to higher growth, Fitch said today.
In its latest Global Economic outlook, Fitch Ratings said it expects India’s real GDP growth to rise to 8 per cent by 2018-19, from 7.9 per cent in 2017-18 and 7.7 per cent in 2016-17.
The Indian economy is estimated to have grown by 7.6 per cent in 2015-16.
“Gradual implementation of the structural reform agenda, which continues to broaden, is expected to contribute to higher growth. Passing of the new Bankruptcy Code in both houses of Parliament in May 2016 shows that implementation of big ticket reforms is possible in India,” it said.
Fitch also said that reforms related to land acquisition and a Goods and Services Tax have not passed thus far.
The Reserve Bank of India’s policy rate cuts of 1.50 per cent in total since the beginning of 2015 are likely to feed through to higher GDP growth, Fitch said.
It, however, added that monetary transmission is impaired by relatively weak banking sector health.
It said higher real disposable income is expected to contribute to faster GDP growth. In rural areas, purchasing power will be supported by above-average rainfall from the monsoon, as expected by the India Meteorological Department, after two years of below-average rainfall.
Urban consumption is likely to be supported by a hike in civil servant wages, after the 7th Pay Commission recommended a wage rise of almost 24 per cent.
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