India’s GDP growth to cross 8% in current fiscal year, says CII

Confederation of Indian Industry (CII) President Naushad Forbes expects India’s GDP growth to cross 8 per cent in the current fiscal year. Most projections, including those by the International Monetary Fund (IMF), the Asian Development Bank (ADB) and the United Nations expect India’s GDP to grow by less than 8%.

“The economy has definitely turned around and CII strongly expects GDP growth to pick up to over 8 per cent during the current financial year,” Forbes said in a press release.

CII's GDP projection for the year was 7.75-8.25 per cent in April 2016, and Forbes expects the year to close at the upward end of the band.

GDP growth for 2015-16 was estimated at 7.6 per cent as compared to 7.2 per cent for 2014-15, according to the latest government data. The last quarter growth rate of 7.9 per cent is the highest for the year.

“We believe that recovery is now well-entrenched and can be expected to pick up pace with better monsoons, rural demand, and ongoing fast-paced reforms process,” Forbes said.

Signs of a recovery are evident in the improved performance of many more sectors than earlier born out of the marked pick-up in core sector growth. Consumer spending has remained strong, reflected, for example, in the rising sales of two-wheelers (over 21 per cent in April 2016) and the growth of domestic air passenger traffic (over 22 per cent in 2015-16).

Although the growth rate of gross fixed capital formation, a proxy for investment, has lagged at 3.9 per cent, CII believes that the first quarter of the current year would show faster growth due to additional capex spending by Government on infrastructure projects.

This would ‘crowd in’ private investments as well, especially as the interest rates have come down, Forbes said.