RBI Forecasts 7.6 percent GDP growth for this fiscal

Reserve Bank of India has said that the near-term growth outlook for India seems brighter than last fiscal and the economy is likely to expand at 7.6 per cent in 2016-17. In its Annual Report 2015-16 released yesterday, RBI said a better than anticipated agricultural performance and the possibility of allowances under the 7th Pay Commission's award being paid out in the fourth quarter of 2016-17 provide upsides to this projection. 

The report highlights that the passage of Goods and Services Tax (GST) Bill marks a new era in co-operative fiscal federalism and a growing political consensus for economic reforms. RBI said, the commitment of the central government to the path of fiscal consolidation in 2016-17 has enhanced the credibility of fiscal policy, which will, in turn, help in anchoring inflation expectations and in improving the business environment. 

RBI has noted that industrial activity has been in contraction mode in the early months of 2016-17, pulled down by manufacturing. It adds that some support to industrial activity may, however, stem from the recent measures taken by the government such as 100 per cent FDI in defence, civil aviation, pharmaceuticals and broadcasting. RBI has added that the effects of Brexit on the Indian economy have been relatively muted, including the immediate impact on equity and foreign exchange markets.