Growth to pick up from 5.6% in FY15 to 7% in FY17: Citigroup

Indi­a’s growth rate is expect­ed to improve to 7 per cent by FY 2017, while infla­tion and the cur­rent account deficit are like­ly to mod­er­ate in the com­ing years, a Cit­i­group report said.

Accord­ing to the glob­al finan­cial ser­vices major, the Indi­an econ­o­my had faced high and sticky infla­tion in 2008–2013, around 50 per cent depre­ci­a­tion in cur­ren­cy and ele­vat­ed inter­est rates, but the “nor­mal­i­sa­tion” process has begun.
“From an unde­sir­able mix of sub-par growth, high infla­tion, ele­vat­ed twin deficits in FY 2013, India is now look­ing at a pick-up in growth, mod­er­at­ing infla­tion and a sharply low­er cur­rent account deficit,” Cit­i­group said in a research note.

Accord­ing to the quar­ter­ly GDP data released last month, GDP growth accel­er­at­ed to 5.7 per cent year-on-year in the first quar­ter of FY 2015, com­pared to 4.6 per cent in the fourth quar­ter of FY14, with encour­ag­ing trends seen across sup­ply and demand side components.

The report fur­ther not­ed that the recov­ery in growth num­bers from 5.6 per cent in FY15 to 7 per cent in FY17 would be “grad­ual” and con­tin­ued pol­i­cy efforts are need­ed to meet the RBI’s 6 per cent CPI tar­get by Jan­u­ary 2016.