Economic growth in India is expected to strengthen to 7.3 per cent in financial year 2018-19 on the back of robust activity from construction, manufacturing, and services sectors, says a report. According to a BMI Research, a Fitch group company, the negative shock from demonetisation and GST implementation has “largely subsided”.
“We expect India’s economic growth to strengthen to 7.3 per cent in financial year 2018-19 (April-March) from 6.6 per cent in fiscal 2017-18 on the back of robust activity from the construction, manufacturing, and services sectors,” the report said.
As per the report, construction is likely to receive a boost from increased public infrastructure spending aimed at improving the nation’s transport and rural infrastructure. Besides, solid economic activity in the US and the UAE, would also support a further expansion of the export manufacturing sector.
Moreover, “continued economic liberalisation by the Narendra Modi administration will likely provide tailwinds for India’s large services sector, which accounts for slightly more than half of the economy,” the report noted.
Another factor that is expected to boost growth is the rise in foreign direct investment (FDI) as a result of ongoing improvements to domestic business conditions and regulatory amendments to encourage higher foreign investor participation such as the liberalisation of domestic single brand retail trading to 100 per cent ownership through FDI. BMI Research has a mixed growth outlook for South Asia in 2018.
“While we forecast growth to pick up in India and Sri Lanka due to a recovery in manufacturing, services, and construction, growth is likely to slow in Bangladesh and Pakistan due to factors such as rising political uncertainty and increasing economic imbalances, respectively,” it said.