The economy is expected to grow over 8% this fiscal with the forecast of above-normal monsoon raising hopes of the agriculture sector’s revival after two successive drought years, Niti Aayog vice-chairman Arvind Panagariya said today.
“The economic growth rate will be more than 8% during the current fiscal. There is a forecast of above-normal monsoon this fiscal,” Panagariya said after delivering a lecture organised by the Central Vigilance Commission here.
He said the economic growth in the current fiscal could be even higher in view of policy and monetary interventions by the government and the Reserve Bank, which will ultimately push the sluggish industrial growth.
Finance Minister Arun Jaitley had also expressed hope that good rains will propel India’s economic growth to 8.5% during the current fiscal, higher than Central Statistics Office advance estimates of 7.6% for 2015-16.
Earlier this month, Indian Meteorological Department has forecasted above-normal monsoon during this kharif season raising hopes of buoyancy in the economy this fiscal.
According to IMD, there are 94% chances of country receiving “normal to above normal” rainfall while there is only 1% probability of “deficient” rainfall.
Agriculture, which contributes 15% to India’s GDP and employs about 60% of the country’s population, is heavily dependent on monsoon as only 40% of the cultivable area is under irrigation.
Due to poor monsoon in 2015-16 crop year (July-June), 10 states have declared drought and the Centre has sanctioned a relief package of about Rs 10,000 crore to help farmers.
In 2015, the monsoon deficiency was 14% with Northwest India recording a deficiency of 17%, followed by 16% in Central India, 15 per cent in Southern Peninsula and 8% in East and North-east India.
In 2014, the monsoon deficiency was 12.3% of the Long Period Average.
The interest regime is also conducive for the economic growth now as the Reserve Bank has cut the key interest rate by 0.25% to and introduced a host of measures to smoothen liquidity supply so that banks can lend to the productive sectors and indicated accommodative stance going ahead earlier this month.
The repo rate, at which RBI lends to the financial system, has come down to 6.5%. This will also push economic activities.