The industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its latest Year-Ahead Outlook has said that Indian economy is likely to touch 7% growth in 2018 with the government policies tilting towards the country's stress-ridden rural landscape in the penultimate year before the 2019 general elections. The report stated that against Gross Domestic Product (GDP) growth of 6.3% in the second quarter of 2017-18, the economic expansion may reach the crucial 7% mark by the end of September 2018 quarter, while inflation may range between 4-5.5% towards the second half of the next calendar year with the monsoon being a key imponderable.
ASSOCHAM has said that its projections for the 7% GDP growth are based upon the assumption of stability in the government policies, good Monsoon, pick-up in industrial activity and credit growth and stable foreign exchange rates. It added that the coming budget is expected to be heavily tilted towards the farmers while the industrial focus will be on the sectors which create jobs. Highlighting that the stress in the agriculture sector is traceable to lack of reforms in the rural economy, it said a realisation seems to be dawning that growth per se is not enough, the benefits must be seen in the form of higher employment and added that the year 2018 would see policies in this direction. Besides, it also said that the import-export policies for the agri products need to be revisited to help growers realise better prices.
The Year-Ahead Outlook pointed out that in the run-up to the state assembly elections in several politically important states like Karnataka, Rajasthan, Chhattisgarh and Madhya Pradesh, after the high stake Gujarat polls, the political economy is set to tilt towards the farm sector which has been witnessing some stress. The report stated that the external sector should continue to do well, with merchandise exports further gaining on the back of smart recovery being witnessed in the US and other important economies. Despite pressure on IT and ITeS exports, the services exports too should remain robust and the overall current account balance would remain well within the manageable limits with rupee continuing to remain steady. It added that the current account deficit may remain well below 2%. However, according to the industry chamber, the underlying bullish sentiment should continue to prevail in the Indian stock market in 2018, the returns on equity may not be as robust as in 2017.