India’s GDP growth may touch 8% during FY16 : Assocham
The overall industrial growth is seen at 7.5-7.8% during the financial year 2016, while the services should expand over 9%, with agriculture and allied picking up to 2.8- 3%India is very likely to achieve a 7.8- 8% GDP growth rate in the current financial year, according to the Associated Chamber of Commerce and Industry (Assocham) Mid Year review. “The review made quite an optimistic forecast of 9% and above growth in the next financial year of 2016-17 if the government and the Congress come together and clear the Goods and Services Constitutional Amendment Bill in parliament and the roll out of the major tax reforms takes place from April 2016,” Assocham said in a statement. Despite the global slowdown, the optimism comes in the backdrop of domestic demand pick- up, supported by government-led investments and the services sector, especially transport, hotels and trade, which according to review, should push the Indian economy at above 8% growth rate. The confidence in industrial growth is largely being driven by manufacturing, electricity and capital goods; while mining is also set to improve in the remaining months of the year. While there was a 3.5% growth in case of civil aviation cargo and a 3.9% in major ports during July-September 2015-16, it’s the manufacturing sector that helped overall Index of Industrial Production (IIP) reach 9.8% in October 2015. The overall industrial growth is seen at 7.5-7.8% during the financial year 2016, while the services should expand over 9%, with agriculture and allied picking up to 2.8- 3%, the review noted. Meanwhile, the number of passengers handled by civil aviation in second quarter of the current fiscal went up by 17%. Commercial vehicles segment also registered a growth of 10.7%, another indicator of pick up in the economic activity. Construction activities seem to be picking up, especially in the roads and highways, while some green shoots are visible in micro markets of real estate as well. With respect to the country’s agriculture sector, the review says if it rains in the next three to four weeks and do not face any unseasonal rains in March, Rabi crops mainly wheat, rice, grams and oilseeds like mustard should help the farm sector. “While the only drag is the export sector and overall external scenario is playing itself out, helping India. The moment dollar started rising against rupee due to strengthening of the US economy, global prices of two main import items for India –crude oil and gold - fell further. So, it was an even –out situation, giving the RBI Governor extra room in the face of global headwinds,” said ASSOCHAM President Sunil Kanoria. The industry body, however, raised concerns over continuous stress on the balance sheets of the public sector banks, stressing on the need for a multi-pronged strategy. “Even if interest rates become further benign, the NPAs and stressed assets would remain a major deterrent for credit growth,” the paper said.
December 21, 2015 | 04:15pm IST
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