The Indian economy is expected to grow by 7.4 per cent in the next fiscal year, India Ratings and Research (Ind-Ra) said on Tuesday.
"India Ratings and Research expects the gross domestic product (GDP) to grow 7.4 per cent year-on-year in FY18...Ind-Ra, however, has revised down GDP growth estimate for 2016-17 to 6.8 per cent from 7.9 per cent, which is even lower than Central Statistical Organisations advanced estimate of 7.1 per cent," the rating agency said in a statement.
Backed by consumption demand and government spending, the gross value added of the three production sectors agriculture, industry and services would grow at 3 per cent, 6.1 per cent and 9.1 per cent year-on-year respectively in 2017-18, the agency said.
"While private final consumption expenditure is expected to grow at 8.9 per cent, the government final consumption expenditure is expected to clock 9 per cent growth in 2017-18," it said.
The rating agency said that it expects the current account deficit to come in at 1 per cent of the GDP in 2017-18 as against 0.9 per cent in 2016-17.
"This will help the rupee trade at an average 69.18/USD in FY18," it noted.
Observing that while India is likely to face continued headwinds on the exports front due to the play out of Brexit and the anti-globalisation stance of US President Donald Trump, it pointed out that imports are unlikely to pick up so long as the domestic investment cycle does not revive.
As against the popular perception, Ind-Ra said the main setback to investment growth came from the negative 2.2 per cent growth in the gross fixed capital formation (GFCF) of household sector.
Ind-Ra expects GFCF to grow at 4.9 per cent in 2017-18. India's economic growth forecast of 7.4 per cent by Ind-Ra in 2017-18 is on the upper end of the 6.75 to 7.5 per cent band estimated in the Economic Survey.