Indian economy likely to grow at 7.4% despite weak monsoons: Report

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Indian economy is expected to grow at 7.4% in the current fiscal despite weak performance of agriculture sector due to poor monsoon, National Council of Applied Economic Research (NCAER) said.

The GDP growth rate forecast is 7.4% for 2015-16 and 2016-17, the economic policy think-tank said in a report.

According to the NCAER report, prospects for agriculture sector in 2015-16 remain weak owing to poor monsoon rainfall for the second year in a row.

Agricultural growth during the first half of the current financial year fell to 2.0% from 2.4% in the first half of 2014-15.

However, rabi output may be comparable to the previous year and the overall food grain output for this year may be marginally higher by approximately 1-2%, it said.
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With regard to factory output, it said the Index of Industrial Production (IIP) contracted sharply in November 2015, with the index declining 3.2%, down from a five-year high of 9.8% in October 2015 and a growth of 3.8% in the comparable period last year.

Manufacturing sector, accounting for 75% of the total industry, was the biggest contributor to the fall in industrial growth, with manufacturing IIP witnessing a steep fall of 4.4% in November 2015.
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Nonetheless, the cumulative industrial growth during April-November period in fiscal year 2015-16 stood at a decent 3.8%, comfortably outpacing the growth seen during the same period for the last three years, it said.

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As far as services sector is concerned, the report said leading indicators present mixed signals in the first three quarters of current fiscal.
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The growth of banking indicators have been mixed, with lower growth in aggregate deposits and higher growth in bank credit to the commercial sector.