Outlook:

The outlook for 2017-18 is much more robust with a favourable domestic and global backdrop. On the domestic front, the economy is set to experience a growth recovery and while the RBI expects GVA to grow at 7.4% YoY in FY 18 with some favourable tailwinds, the recent revamp of the IIP and WPI series may well propel it higher towards 8%. Monsoon is forecast to be normal for the second consecutive year which bodes very well for demand recovery. Moreover, the ongoing remonetisation process and lagged effect of past rate cuts along with a further reduction in banks' lending rates will aid discretionary consumer spending and growth recovery. Focussed expenditure, especially on the rural economy and affordable housing, roll-out of GST and steps to attract higher foreign direct investment (FDI) will also be supportive of growth. Importantly, notwithstanding initial challenges, GST implementation entails sustained positive gains for the economy in the long term. On the global front too, demand backdrop is expected to be favourable with most forecasts pegging global output and trade higher in 2017 and 2018 as compared to the recent past.

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