India's GDP growth to accelerate in next 2 fiscals: HSBC

05 Jan '18

1 min read

India’s growth rate may accelerate this year to reach 7 per cent in 2018-19 and 7.6 per cent by 2019-20 as key sectors would revive from disruptions related to the goods and services tax (GST) and demonetisation, according to a research note by global financial services firm HSBC. Recent structural reforms will lead to brighter growth prospects beyond 2020.

HSBC expects India’s gross domestic product (GDP) growth to be around 6.5 per cent in 2017-18.

Recovery will likely be relatively gradual, preventing price pressures from rebounding and allowing the Reserve Bank of India (RBI) to keep rates on hold for the time being. Once the impact of transient factors wanes, inflation will settle around RBI’s target of 4 per cent, a news agency reported citing the HSBC research note.

HSBC expects inflation to average 3.4 per cent over fiscal 2017-18 and forecasts RBI will keep the repo rate on hold.

RBI in its fifth bi-monthly review of this fiscal kept the repo rate unchanged at 6 per cent and reverse repo at 5.75 per cent while raising the inflation forecast for the remainder of 2017-18 to 4.3-4.7 per cent. (DS)

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