Ficci survey pegs FY17 growth at 7.7%

Survey says growth in 2016-17 is expected to be supported by improvement in agricultural and industrial sectors

Performance of the agriculture sector would help India post 7.7 per cent growth in 2016-17, said a survey by the Federation of Indian Chambers of Commerce and Industry (Ficci).

The findings were released on Monday, a day ahead of the government's scheduled release of the gross domestic product (GDP) data for 2015-16. Advance estimates had put GDP growth at 7.6 per cent for 2015-16. The survey estimated median GDP growth forecast of 7.7 per cent for 2016-17.

Agriculture was expected to record a median growth of 2.8 per cent in 2016-17, with a range of 1.6 per cent to 3.5 per cent against 1.1 per cent in the advance estimates of 2015-16. Industrial growth was anticipated to grow 7.1 per cent in 2016-17, slightly lower than 7.3 per cent given in advance estimates for 2015-16. The survey also projected services to grow 9.6 per cent, higher than the 9.2 per cent in advance estimates for 2015-16.

The survey was conducted during April among economists, who were asked to provide forecasts for key macro economic variables for 2016-17 and for January-March FY16 and April-June FY17. The median growth forecast for the Index of Industrial Production (IIP) was put at 3.5 per cent for 2016-17 against 2.4 per cent in the previous year.

The outlook on inflation remained moderate. The median forecast for Wholesale Price Index-based inflation for 2016-17 was 2.2 per cent, while it was at 5.1 per cent for Consumer Price Index-based rate of price rise.

Views of the economists were also sought on whether the government would be able to achieve the fiscal deficit target of 3.5 per cent of GDP in 2016-17. A majority said the fiscal deficit target for 2016-17 seemed achievable. It was pointed out that some of the enabling factors would include expectation of a normal rainfall, improved buoyancy in domestic growth leading to higher revenue collection through direct and indirect tax collections and government continuing with subsidy rationalisation.

However, it was also pointed out that it would be important to realise the non-tax revenue target for achieving the targeted fiscal deficit to GDP ratio. Realising the targeted receipts from disinvestment and spectrum sales would be a critical factor.

The economy would have to achieve growth rate of 7-7.75 per cent this financial year (as projected in the Economic Survey) to be able to garner the requisite amount of revenue receipts.

An increase in global crude oil prices could change the projected trajectory of fiscal deficit this year.

On recovery of the banking system, majority of the economists said recovery would take time. It was unanimously that a turnaround in this financial year was unlikely.