Fin Min predicts mixed trends for Indian Economy for next fiscal
05 February, New Delhi
Uncertainty on account of significant external political developments, global interest rate behaviour and capital flows pose potential downsides for the Indian Economy in the next fiscal year, the Finance Ministry has predicted.
In its paper on “Macro-Economic Framework”, the Ministry assessed the prospects for Indian economy for the year 2017-18 in the light of emerging global and domestic developments.
“Indications are that global economic growth is gradually picking up. This augers well for Indian exports which are highly responsive to the dynamics of global economic activity,” the statement said.
On the other hand, the increasing global prices of oil and other key commodities may exercise an upward pressure on the value of imports.
Domestic demand is expected to get a boost from accommodative monetary policy and the unleashing of domestic trade and consumption as the economy gets remonetised to the required levels.
“On balance, and, in line with the projections for strengthening of India’s growth by multi-lateral institutions, the nominal growth of the economy is expected to be 11.75 per cent in the financial year 2017-18,” the Ministry said.
As per the First Advanced Estimates released by the Central Statistics Office, the economy is estimated to grow at 7.1 per cent in 2016-17, as compared to the growth of 7.6 per cent achieved in 2015-16.
The growth in agriculture, industry and services is estimated at 4.1 per cent, 5.2 per cent and8.8 per cent in 2016-17 as opposed to 1.2 per cent, 7.4 per cent and 8.9 per cent respectively in 2015-16.
Growth rate of industry sector declined in 2016-17 mainly on account of contraction in mining & quarrying and moderation of growth in manufacturing sector. It was the services sector, led by public administration, defence and other services that resulted in the overall growth rate of 7.0 per cent in 2016-17.
From the demand angle, the expansion in government final consumption expenditure has been the major driver of growth.
The growth in fixed investment at constant prices declined from 3.9 per cent in 2015-16 to (-) 0.2per cent in 2016-17. The exports of goods and services are estimated to grow by 2.2 per cent whereas the imports are projected to decline by 3.8 per cent in 2016- 17.