India to grow 5.6% this fiscal, 6.5% in FY16: Fitch

Says investment likely to rise now that political uncertainty has disappeared

India’s growth is expected to accelerate to 5.6 per cent in the current financial year and further to 6.5 per cent in 2015-16, buoyed by strong investments and political certainty, rating agency Fitch said on Wednesday.

“The new government has started rolling out a number of policies, which may improve the efficiency of the bureaucracy and strengthen the investment climate,” Fitch said.

Fitch expects gross domestic product (GDP) growth to pick up to 5.6 per cent in FY15 (ending in March) and 6.5 per cent in both FY16 and FY17, the agency said, in its global economic outlook report.

“Investment is likely to rise now that political uncertainty has disappeared since the new government came to power last May,” it added.

The Reserve Bank of India has projected a 5.5 per cent GDP growth for the current financial year and 6.3 per cent for 2015-16.

Fitch further said the expected pick-up is supported by the 5.7 per cent GDP growth in April-June quarter of FY15.

India had clocked a sub-five per cent growth in the previous two financial years. It grew 4.5 per cent in in 2012-13 and 4.7 per cent in 2013-14.

Fitch said lifting GDP growth to substantially higher levels would require large productivity gains through implementation of reforms related to governance, product and labour markets, as well as reduction of infrastructure bottlenecks.