Amid increasing global headwinds, Crisil Research in its report has said that Indian economy is expected to grow at 7.9 per cent in the fiscal year 2016-17, lower than earlier forecast of 8.1 per cent and higher from 7.6 per cent expected in the current fiscal, if supported by a normal monsoon. According to the report, growth in the next fiscal will find mild support from improved transmission of the RBI's policy rate cuts and the implementation of the salary and pension revisions recommended by the One Rank One Pension Scheme and the Seventh Pay Commission.
The report further highlighted that the economy's modest recovery so far has been shaped by good luck on crude oil and commodities, and a supportive policy environment. While this is expected to continue, India cannot afford to be third-time unlucky with rains and added that a normal monsoon in fiscal 2017 will give agriculture a one-time growth kicker because of the low-base effect of the last two years.
Crisil further notified that while a slowing world implies prices of crude oil and the commodity complex will remain battered, which will bolster the fiscal math, sluggishness in global demand will prolong the agony for exporters. That means the trigger for growth in fiscal 2017 will come from within or the domestic economy and, as in the current fiscal, another dose of good luck through low crude oil prices will be useful.
The report further stated that it also expects the government to improve ease of doing business even more and pass the important reforms such as the Goods and Services Tax (GST), which can improve investor appetite.