India's growth to rise to 8 percent in FY2019: Fitch

MUMBAI: India’s economic growth rate will slowly accelerate to 8% by fiscal year ending March 2019, driven by the gradual implementation of structural reforms, higher disposable income and improvement in economic activity, global rating agency Fitch said in a report released on Thursday.

Fitch expects India’s GDP to grow 7.5% in fiscal year ending March 2016 and improve to 7.7% in the current fiscal year and further to 7.9% in the fiscal year ending March 2018.

The global agency said that the passage of the Bankruptcy Code earlier this month showed that implementation of big ticket reforms is possible in India, even though reforms related to land acquisition and a Goods and Services Tax have not passed thus far.

It also expects higher disposable income to contribute to faster GDP growth. “In rural areas, purchasing power will be supported by above-average rainfall from the monsoon, as expected by the India Meteorological Department, after two years of below-average rainfall,” Fitch said.

India remains the fastest growing country across the world with GDP in 2016 estimated to grow at 7.55% year on year compared to global GDP which is likely to grow at 2.5% according to Fitch estimates.

On Thursday, the agency sharply cut its forecast for US private investment growth and forecasted that the US economy will grow at 1.8% in 2016, the first sub-2% growth since 2013.

However, growth expectations for China have been revised up to 6.3% in 2016 and 2017, from 6.2% and 6% previously, as earlier policy stimulus gains traction and the authorities' commitment to stabilising near-term growth has strengthened.

"The near-term threat to emerging market growth has eased, due to a more assertive stimulus policy in China and the stabilisation of commodity prices," said Brian Coulton, chief economist at Fitch was quoted as saying the report.