Revival in rural demand, increased infrastructure spending is likely to drive India’s growth in current year, even as increasing debt and trade protectionism could pose a challenge, said a Deloitte report.
The ‘Voice of Asia’ report of Deloitte predicts a faster than expected growth for Indian economy against the backdrop of increasing crude oil prices and volatile market conditions. “The improvement in domestic conditions is a positive sign that growth is picking up and will continue to maintain strong momentum in 2018, retaining India’s position as the ‘fastest growing large economy’ in the world,” it said.
Showing signs of recovery, the Indian economy recorded a five-quarter high growth of 7.2 per cent in October-December on good showing by key sectors like agriculture, construction and manufacturing.
The economy is expected to grow at 6.6 per cent in the current financial year ending March 31, as per official estimates, compared with 7.1 per cent in 2016-17.
“After a year of disruptions and growth slowdown, Indian economy is consolidating the gains from the recent reforms and is moving in the right direction. With a steady increase in FDI inflows and pickup in growth in the Q3 of 2017, 2018 will expectedly remain a period of strong growth for India with a growth rate of around 6.8-6.9 per cent,” Deloitte India partner and lead economist Anis Chakravarty said.
The report said that the negative effect of major reforms like GST and demonetisation is wearing off now as there is high optimism in domestic demand in the form of consumption and revival in small-scale business activities, resulting in an increase in FDI flows into India.
Moreover, the government has made huge strides towards financial inclusion and pushing the expansion of digital India. India is steadily moving towards greater formalisation of the informal economy, it added.
The report said with eye on infrastructure development, the government has given green light to an Rs 7 trillion infrastructure programme in late 2017, with the aim to pave more than 80,000 km of road by March 2022.