India’s GDP is likely to grow to 7.7% in 2017-2018, according to a report by US based rating agency Fitch. It also stated that growth for this year will be 7.1%.
According to the agency, India’s GDP will remain at 7.7% in FY 2018-19 as well. This growth will be spurred on by implementation of structural reforms, combined with increased disposable income after the Seventh Pay Commission comes into play.
The Reserve Bank of India’s (RBI’s) monetary policy has resulted in reducing interest rates and could boost the economy, according to officials at Fitch. The report also indicated that there could be no change in RBI’s policy rate, with it likely to remain at 6.25 percent.
While the agency was confident about a growth in the economy, it was surprised at the GDP growth portrayed by the government during the October-December quarter last year. Data released by the statistics department put the growth at 7 percent for the quarter.
According to communication from the company, the numbers are “surprising”, given the fact that demonetisation resulted in reduced consumption of products and services.
This portrayal, according to Fitch, could be on the back of the official data’s inability to quantify the negative results of demonetisation witnessed in the informal sector.
It also stated that the formal sector stayed strong during the period following demonetisation, with it possible for the GDP growth to be revised in the future.