Increased consumption, as more new bank notes are put in circulation, and as planned salary and pension hike for state employees are implemented, will accelerate the growth of Indian economy. The country’s GDP is likely to expand 7.4 per cent in fiscal 2017 and 7.6 per cent in fiscal 2018, says the Asian Development Bank (ADB) in its latest report.
“inflation, meanwhile, is expected to accelerate to 5.2 per cent in FY2017 and 5.4 per cent in FY2018 as the global economy recovers and commodity prices rebound,” the Manila based organisation says in its ‘Asia Development Outlook (ADO) 2017 report.
The public sector will remain the main driver of investment as banks continue to wind down balance sheets constrained by high levels of stressed assets. Exports are forecast to grow by 6 per cent in the coming year, according to the report.
The assessment notes risks from higher oil prices as India imports nearly 80 per cent of its fossil fuel needs. A rapid increase in the price of oil could undermine the country’s fiscal position, stoke inflation, and swell the current account deficit. The report estimates that a $1 increase in oil prices raises the import bill by nearly $2 billion. In FY2016, rising oil prices resulted in a 37.6 per cent increase in India’s import bill. To mitigate India’s vulnerability to oil price swings, the government has proposed reducing dependence on imported oil by 10 per cent over the next 5 years through more efficient domestic production and increased private investment into the sector. (RKS)
Source: fibre2fashion.com