India has been amongst the few exceptions, having recorded one of the highest growth rates globally, CARE said.
India's Gross Domestic Product (GDP), rating agency CARE on Monday said, will improve to 7.8% in FY17, surpassing Finance Minister Arun Jaitley's expectation of 7.6%.
Earlier this month, Jaitley had said that though 7.6% growth is "much less" than its potential and expressed hope for better numbers next year.
In a report dated April 11, CARE Ratings said, "This growth is to be bought about chiefly by some pick-up in domestic demand and private consumption (assuming a normal monsoon), prevalence of low inflationary environment and lower interest rates". The report mentioned that implementation of 7th Pay Commission recommendation and One Rank One Pension scheme will increase the income levels which will support the domestic demand.
The agency said that the agriculture this year is likely to grow at 3% as against a meagre 1.1%, last year. The Government, on Monday, said that the monsoons in this year are expected to be good. Private sector weather forecaster, Skymet, too, said that the monsoons this year will be above normal.
CARE said, "Based on the latest weather updates, the country is likely to see normal monsoons this year which will aid agricultural output."
"The growth estimate also factors in the likelihood of normal monsoons this year that could help sustain rural demand. The various initiatives taken by the government could also add to the economic activity, albeit to a limited extent, as these measures being long term in nature would see the benefits accruing over a period of time", the agency said.
On the industrial front, the agency pointed out that the growth in industrial production for the consolidated 10 months of the fiscal year has been flat. "Among the main segments, electricity saw increased production, while manufacturing growth has been rather just about stable. We expect the industrial sector to grow between 4-5% in FY17", the agency said.
Apart from CARE, CII too predicted higher GDP than Jaitley. On Thursday, terming the GDP calculation methodology an "imprecise science", CII pegged the country's economic growth at around 8% for the current fiscal.
"Now you may compare this with 7.6% that the RBI forecasts for 2016-17. I can only point out to you that the way in which GDP is calculated is somewhat imprecise science," new CII President Naushad Forbes told reporters.
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