Global rating agency Fitch has stated that India's economic growth will accelerate to 5.5 percent in the FY15. Fitch also revised the growth rate upward to 6.5% in FY16 from 6% projected earlier.
The rating agency noted that latest policy announcements by new government signal a strong intention to pursue reforms. However, Fitch added that budget 2014-15 will give more indications on the government's policy intention, while implementation of the measures will clarify the level to which growth can be boosted.
Fitch mentioned below normal monsoon as the single biggest concern for growth forecast of 5.5 percent for FY15. The rating agency mentioned that although weak monsoon is likely to hit already-high food inflation, recent government announcements on reforms in agriculture produce markets and food distribution fronts will help to cap rising retail inflation. Retail inflation recorded at 8.28% y-o-y in May as against 8.59% in April.
Meanwhile, Fitch highlighted the need for bold reforms to boost economic growth. The agency highlighted that measure related to fiscal consolidation, farms productivity gains through reforms and the elimination of infrastructure bottleneck are likely to provide impetus to economy.