India’s GDP growth is likely to revive to 7.9 per cent in the current financial year and then further up to 8.1 per cent in 2016-17, driven by structural reforms and cyclical easing of the monetary policy, says a Citigroup report.
According to the global financial services major, investment and consumption uptick is likely to result in a growth pick-up from 7.3 per cent in 2014-15.
“Going forward, given the ongoing trends of structural reforms, coupled with cyclical easing of the monetary policy by further 25 basis points in the current fiscal and range-bound commodity prices, India’s growth is likely to revive to 7.9 per cent in 2015-16 and towards 8.1 per cent in 2016-17,” Citigroup said in a research note.
The report, however, cautioned that the recent spell of unseasonal rains – impacting around 10 per cent of standing winter crops – and the forecast of a “deficient” monsoon pose a challenge to the ongoing improvement in growth inflation dynamics.
The Met Department has predicted a deficient monsoon and revised downwards its forecast for this year to 88 per cent of the Long Period Average from the earlier 93 per cent. The North-West is expected to be hit the most.
On structural reforms, Citigroup said: “We remain constructive on the structural reform agenda of the government. The less-contentious constitutional amendment Bill for GST is likely to be passed in the next monsoon session (mid-July),” the report said.