NEW DELHI : Fitch Ratings expects India’s GDP growth to rise to 7.4% in the current financial year that began April on the back of a likely pick up in investment, the rating agency said in a report on Tuesday.
According to latest available data, India’s GDP growth slowed down to 6.1% in Jan-Mar from 7.0% a quarter ago, dragged down by lower growth in the industry and agriculture sectors.
GDP growth for 2016-17 came in unchanged at the previous estimate of 7.1%, on account of an upward revision in the first two quarters of the fiscal.
India’s GDP growth is seen inching up to 7.5% in 2018-19 (Apr-Mar), the report said. Transmission of supportive monetary policy of the past two years, and the acceleration of structural reforms are likely to help revive investment in India from its current lows, the rating agency said.
“The goods and services tax, expected to be applicable from July of this year, will facilitate trade within India and reduce transaction costs. Public spending on infrastructure is also set to rise, boosting investment,” the report said.
Fitch, however, warned that the steep decline in investment following demonetisation could pose risks for India’s growth potential in the medium to long term.While consumption growth fell sharply after the discontinuation of 500-and 1000-rupee notes in November, investment growth slipping into the red was more worrisome, the report said.