New Delhi, Jan 5: The Government on Friday said that the country’s economy is poised to grow at 6.5 per cent in the current fiscal year -2017-18. The growth rate for the same period in the previous year (2016-17) was recorded at 7.1 per cent. The reasons for decline in the growth rate could be attributed to demonetisation and the Goods and Services Tax (GST). Many leading economists had predicted such forecast. Also Read - Economy in Recovery Phase, India's GDP to Expand by 11% in FY21-22: Fitch
Speaking in Lok Sabha earlier on Friday, the last day of Winter Session of Parliament, Finance Minister Arun Jaitley asserted that the Government has
taken various initiatives to improve the confidence in the Indian economy and boost the growth of the economy. Also Read - Impact of Coronavirus Pandemic? Real GDP Likely to Contract by 7.7% in 2020-21
“The Government had also announced various measures in the budget 2017-18 which, among others, include push to infrastructure development by giving infrastructure status to affordable housing, higher allocation to highway construction, and focus on coastal connectivity. For highways development the Bharatmala Pariyojana has been launched. The government has announced a phased program for bank recapitalization to the tune of about Rs 2.11 lakh crore over the next two years,” Jaitley said. Also Read - GST Officials Detect Over Rs 830 Crore Tax Evasion by Pan-masala Manufacturing Unit in Delhi
“It is difficult for GDP to cross 7 per cent this fiscal unless the base is revised downwards. The economy is expected to do well in the third and fourth quarter,” SBI Research Chief Economist Soumya Kanti Ghosh told PTI. [Also read: S&P Global Ratings Affirms ‘BBB-A/3’ Ratings on India, Outlook Stable]
Former Planning Commission Deputy Chairman Montek Singh Ahluwalia said the GDP growth would be around 6.2 per cent to 6.3 per cent for the current fiscal. Echoing similar concerns. Sugata Bhattacharya, chief economist at Axis Bank, said the Gross Value Added (GVA) would be 6.6-6.8 per cent for the current fiscal. [Also read: GDP Growth Improves to 6.3% In July-September Quarter]
“We have not factored in tax collections in the current fiscal. But if the tax collections remain robust then the GDP growth could be higher,” he said.
The GVA is a new concept introduced by the CSO to measure the performance of the economy. The GDP is tabulated by adding taxes to the GVA after reducing subsidies from that.
International rating agency Standard and Poor’s had kept the growth outlook for India ‘stable’ and rated the world’s third-largest economy ‘BBB-‘ in its latest report in November.
The report said India has a sizable fiscal deficit which remains around the expected level. “Nevertheless, sizable fiscal deficits, a high net general government debt burden, and low per capita income detract from the sovereign’s credit profile,” S & P Global added.
Moody’s Investors Service had raised India’s sovereign rating for the first time in over 13 years, saying that growth prospects have improved with continued economic and institutional reforms. The US-based agency upped India’s rating to Baa2 from Baa3, changing outlook to ‘stable’ from ‘positive’, and said that reforms will help stabilise rising levels of debt.