Output growth likely to improve in FY17: RBI survey

India’s real economy, as measured by the Gross Value Added (GVA), is likely to expand by 7.6 per cent in 2016-17 due to improvement in farm and industry sectors, said an RBI-sponsored survey of professional forecasters.

“Output growth, measured using GVA at basic prices, is likely to improve gradually in 2016-17 and further in 2017-18.  Quarterly growth projections for the next five quarters indicate that growth is likely to improve...,” RBI said while releasing the survey on macroeconomic indicators.

In the 40th round of survey, the forecasters expect real GVA to increase by 7.6 per cent in 2016-17.The survey further said ‘agriculture and allied activities’ and services are expected to grow by 2.9 per cent and 8.8 per cent, respectively. Industry growth forecast has been placed at 7.6 per cent.

Regarding 2017-18, the forecasters said real GVA is expected to increase by 7.8 per cent, led by growth in services by 9.2 per cent. Agriculture and allied activities and industry are expected to grow by 2.7 per cent and 8 per cent, respectively.

The long-term real GVA growth expectations remained unchanged at 8.3 per cent in the current round compared to the previous round. The medium-term growth forecast for the next five years increased to 8 per cent over 7.8 per cent in previous round.

Private final consumption expenditure at current prices is expected to increase by 10.7 per cent in 2016-17 and further by 11.9 per cent in 2017-18. Forecasters expect gross saving rate at around 31.5 per cent of Gross National Disposable Income (GNDI) in 2016-17 and 32 per cent in 2017-18.

Further, merchandise exports is likely to grow 1 per cent in 2016-17 which constitutes a downward revision by 70 basis points (bps) from 1.7 per cent in the previous round. Growth of merchandise exports is expected to improve to 5.3 per cent in 2017-18.

Current Account Deficit is projected at 1.1 per cent and 1.5 per cent (of GDP) in 2016-17 and 2017-18, respectively. CPI inflation is expected to be at 5.2 per cent in first quarter of 2016-17 and remain above 5 per cent till fourth quarter of this fiscal.

Centre’s gross fiscal deficit (GFD) is projected at 3.5 per cent of GDP in 2016-17 and is expected to moderate to 3.1 per cent of GDP next fiscal.

The results of the survey represent the views of the respondent forecasters and in no way reflect the views or forecasts of the RBI, the central bank said. A total of 23 professional forecasters participated in the survey conducted in May 2016.