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Rediff.com  » Business » If monsoon is normal, GDP could touch 8% in FY18

If monsoon is normal, GDP could touch 8% in FY18

Source: PTI
March 28, 2017 21:56 IST
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The overall FPI inflows should move into the range of $15-20 billion in fiscal 2017 with equity dominating with $10-15 billion and debt with $5 billion

Rating agency Care on Tuesday said it expects GDP growth to accelerate to 8 per cent next financial year and flagged monsoon as the only area of concern that may scupper this.

"We expect growth would be in the higher range of 7.5-8 per cent next year as against 7.1 per cent in this year as per the latest CSO estimate," it said in a statement.

It singled out the monsoon as "the only domestic risk factor" for the economy. Private weather forecaster Skymet on Monday projected a poor monsoon season this year.

The report said government is on its way to introduce the GST which should give confidence to investors. Apart from GST, government has also introduced other reform measures of the administrative front and also in distribution channels.

All these developments should "augur well" for the markets and the interest of foreign portfolio investors (FPI) should be higher, it said.

The overall FPI inflows should move into the range of $15-20 billion in fiscal 2017 with equity dominating with $10-15 billion and debt with $5 billion, it said.

Debt flows would be contingent on the interest rate differential between the Fed induced interest rates in the US and domestic rates, it said, adding domestic rates should remain stable at least in the first half of fiscal 2018.

The report also said RBI will wait for the progress of the monsoon and cut rates only when the scenario is clear and the inflation is below 5 per cent.

Many analysts are expecting an acceleration in the GDP growth in the next few years and government has also been spelling out its intention to grow faster at about 8 per cent over a sustained period of time.

Given the growth-impacting demonetisation exercise, many analysts are raising question marks over the veracity of the recent set of official figures.

Photograph: Mian Khursheed/Reuters

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