Global rating agencies thumb up India growth story

In view of the strong growth fundamentals, the multilateral rating agencies including ADB, Moody’s and Fitch, among others, have maintained India’s growth forecast for the current fiscal at 7.3 percent, 7.5 percent and 7.8 percent respectively and also echoed similar sentiments for the next fiscal. As a matter of fact, ADB’s projection is slightly different from others as global rating agency Fitch upped growth projection for the current fiscal to 7.8 percent from 7.4 percent previously. Similarly, the RBI’s estimate is 7.4 percent and the Government feels that it could be 7.5 percent. Asian Development Outlook (ADO) 2018, the ADB noted a strong 8.2 percent during first three months of the current fiscal.

It claimed that during this period, private consumption grew by 8.6 percent, with rural demand recovering as the effects of demonetization waned and rural incomes increased. However, the International Monetary Fund (IMF) cut its projection to 7.3 percent from 7.4 percent. India Ratings too lowered its growth projection by 20 bps to 7.2 percent. Investment grew by 10 percent in a second consecutive quarter of double-digit growth, spurred mainly by higher government capital expenditure on new infrastructure and an improved business environment. The manufacturing sector benefited from a low base and resolution of GST teething problems while construction gets impetus from rural housing and creation of new infrastructure. Growth in services moderated marginally from the previous quarters as some sectors like trade, transport, and communication services continue to adjust to the GST.