India’s growth to accelerate in 2018- 19: Patel
Washington: The Indian economy gave a resilient performance in 2017- 18 and the country’s growth is expected to accelerate next fiscal, RBI governor Urjit Patel has said. Although the real GDP growth was moderated to 6.6 per cent from 7.1 per cent a year ago, there was a strong rebound in the second half of the year on the back of a turnaround in investment demand, the Reserve Bank of India governor said.
RBI governor Urjit Patel said that the economy is expected to pick up to 7.4 per cent in FY19, with risks evenly balanced.
“The economy turned in resilient performance in 2017- 18. Although real GDP growth moderated to 6.6 per cent from 7.1 per cent a year ago, there was a strong rebound in the second half of the year on the back of a turnaround in investment demand, supported by an acceleration in manufacturing, rising sales growth, a pick- up in capacity utilisation, strong activity in the services sector and a record agricultural harvest,” said Mr Patel.
Mr Patel said that several factors are expected to accelerate the pace of growth in FY19. “There are now clearer signs that the revival in investment activity will be sustained. Global demand has been improving, which should encourage exports and boost fresh investments,” he said.
Mr Patel said that since November 2016, headline consumer price inflation has remained below the medium- term target of 4 per cent. “An unusual spike in vegetables prices pushed up inflation to a recent peak of 5.2 per cent in December, but it eased in subsequent months to reach 4.4 per cent in February,” said Mr Patel.
He said that several factors are likely to influence the inflation outlook, including a possible moderation in food prices if the monsoon turns out to be normal and is supported by effective food supply management.
“Countervailing this, upside risks emanate from the distinct hardening bias in crude oil prices, the steady firming up of inflation ex food and fuel mirroring pick up in domestic demand, and spillovers from financial volatility as markets re- price the path of monetary policy normalisation by systemic central banks,” he said.