Good monsoon to push GDP growth to 8%: CII survey

If the Met predictions of above-normal monsoon turn out to be true, India's Gross Domestic Product (GDP) growth could easily cross the 8 per cent-mark in FY17, several representatives of India Inc have said in a survey by Confederation of Indian Industry (CII).

The GDP growth for 2016-17 is well poised to be above 8 per cent on the back of higher rural demand and government's economic reforms.

The GDP grew by 7.9 per cent in the quarter ended March 2016, beating expectations. As a consequence, full year growth in FY16 accelerated to 7.6 per cent, from 7.2 per cent in FY15.

The survey suggests that higher growth in core sectors, which grew by 8.5 per cent in April, can be seen as a sign of things to come. The rise in sales of two-wheelers and the growth in domestic air passenger traffic are among the areas that have shown rising consumer spending.

Although the growth rate of gross fixed capital formation, a proxy for investment, has lagged at 3.9 per cent, CII President Naushad Forbes said, the first quarter of FY17 would show faster growth due to additional spending by the government on infrastructure. This would "crowd in" private investments as well, especially as the interest rates have come down, Forbes added.

The share of completed projects as a proportion of projects under implementation has also improved in the quarter ended March 2016, the survey said.

The survey results show that growth has bottomed out in the majority of sectors.

Also, more sectors have moved from low-growth to moderate and high-growth categories. Capacity utilisation too has picked up, indicating demand acceleration.

This reflects the increased growth in private consumption (7.4 per cent) in the official data.

Federation of Indian Chambers of Commerce and Industry (Ficci) also expects high growth, thanks to changing investment environment and business sentiment. "Going ahead, we expect this momentum to be maintained with the government clearly focused on creation of livelihood opportunities through a robust growth performance," said A Didar Singh, Ficci secretary general.