Rating agency ICRA has projected Indian economic growth to improve to 7.7 percent in the fiscal year 2016-17, led by domestic consumption demand post the implementation of 7th Pay Commission and One Rank One Pension (OROP) recommendations for the defence services as well as a potential upturn in rural demand presuming a normal monsoon.
The agency, in its Macroeconomic Update, said that although the fresh project pipeline appears robust, commencement of work will lag announcements, given moderate capacity utilisation in some sectors. As regards project activity, it said announcements of new project in October-December quarter of current fiscal stood at Rs 1.2 lakh crore, concentrated in electricity, machinery, transport equipment, transport services and miscellaneous services.
ICRA further said a sizeable portion of the planned rise of Rs 1.2 lakh crore in Plan expenditure in 2016-17 is to be funded through extra-budgetary sources, progress on which will influence the pace of infrastructure augmentation and economic growth. Last month, the Economic Survey had predicted real GDP growth for 2016-17 to be in the 7-7.75% range.