As India is expected to grow at a four-year low of 6.5% in the fiscal year 2017-2018, experts are pegging a higher growth in the next fiscal, saying that there are signs that “country’s growth has bottomed.” DBS group economist Radhika Rao, in a note, said, “Consumption is on track to improve, which, along with better export orders, could support manufacturing and services. Investment is a mixed bag, but the worst is over. Strong global demand should help India; we expect growth to improve (from mid-6%) to low-7% in FY19.”
“High-frequency data signal an improvement in the underlying trends, even if all engines are not firing away. Consumption is on track to improve, which, along with better external demand, could support manufacturing and services,” Radhika Rao added.
Other economists, too, have predicted similar economic growth in the next fiscal. Deutsche Bank India CEO Ravneet Gill has said that the structural changes that are undertaken by the government haven’t yet paid off and so, upside from that is significant. “Moreover, corporate earnings growth is also expected to return in 2018,” Ravneet Gill told CNBC-TV18.
A report by Standard Chartered also pegged a better growth for India, saying that the worst is over for the GDP. “We expect growth to normalise gradually over the next four to six quarters as the disruptive impact of major policy changes fades,” Standard Chartered said in its Economic Outlook in 2018 report.
Kotak Securities, too, said that the economy will gradually recover in FY19. Meanwhile, several macroeconomic factors also pointed towards an economic uptick in coming months. According to ICRA, manufacturing is likely to display healthy expansion in volumes in Q3 FY 2018, which should result in a substantial improvement in capacity utilisation on a year-on-year basis.
The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) also rose to 54.7 in December, a five-year high, as growth was recorded across all three monitored categories — consumer, intermediate and investment. Indian manufacturers upped their staffing levels at the end of the year. In fact, job creation accelerated to the strongest since August 2012, the survey said.