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FICCI forecasts India's GDP to improve to 6.2% in Q2FY18

The Industry body, Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest Economic Outlook Survey has forecasted India's gross domestic product (GDP) growth to improve to 6.2 percent in July-September quarter of the fiscal year 2017-18 (Q2FY18) and rise further to 6.7 percent in the third quarter of current fiscal. In Q1FY18, the country's GDP fell to a 3-year low of 5.7 percent. It said that the slowdown in the economy due to demonetisation and the adjustment impact of the goods and services tax (GST) implementation seemed to be bottoming out and as the new indirect tax regime stabilizes, the economy would see an improvement in its performance.

FICCI said that steps taken by the government to reduce the compliance burden related to GST and make implementation smoother, the plan announced for recapitalisation of banks and the thrust on the infrastructure sector have been acknowledged by the survey participants as indicating the government's resolve to address key issues that are hobbling growth. The survey participants also mentioned that government should continue with its emphasis on productive capital investments in the social and physical infrastructure space, even if this requires some calibration of the fiscal deficit target. They projected the budgetary fiscal deficit for the current year likely to be slightly higher at 3.3 percent. The government has set the target of containing it at 3.2 percent.

On the inflation front, the survey showed that wholesale inflation for the current fiscal was likely to be around 2.8 percent and consumer price indexed (CPI), or retail, inflation would be a little higher at 3.4 percent. The industry body further said that the government must take steps to strengthen consumption demand and continue with its focus on productive capital spending. It also suggested that the Reserve Bank of India (RBI) can undertake a reassessment of various loan rates and other ratios based on their historical trends and corresponding economic impact in order to identify a possible way of promoting credit off-take across various sectors.

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