MOSL: Fuel or Engines (Economy)-Expect real GDP growth to remain sub-7% in FY18-Fiscal limits and net exports may cap real GDP growth
​Fuel or Engines (Economy): Expect real GDP growth to remain sub-7% in FY18; Fiscal limits and net exports may cap real GDP growth
“Fuel or Engines†is our new monthly product, in which we intend to expand our consumption v/s investment theme. This is an extension to our ‘India 2020’ report released in June 2016.
In our detailed study on the 2017-18 budget for the general government (center + states) last month, we concluded that limited resources are constraining the ability of the general government to increase spending faster, and thus, support real GDP growth. Also, a trend reversal is expected in net exports of goods & services (a proxy to current account deficit, CAD), which would lead to a drag on real GDP growth in FY18 in contrast to a boost to real GDP growth during the past four years. Consequently, while the Reserve Bank of India (RBI) expects India’s real GDP growth to pick up from 6.7% in FY17 to 7.4% in FY18, we believe that real GDP growth may remain unchanged at ~6.8%.
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