India's real economy to expand by 7.6% in 2016-17: RBI survey

India's real economy, as measured by the Gross Value Added (GVA), is likely to expand by 7.6% in 2016-17 due to improvement in farm and industry sectors, said an RBI-sponsored survey of professional forecasters.

"Output growth, measured using GVA at basic prices, is likely to improve gradually in 2016-17 and further in 2017-18. Quarterly growth projections for the next five quarters indicate that growth is likely to improve...," RBI said while releasing the survey on macroeconomic indicators.

In the 40th round of survey, the forecasters expect real GVA to increase by 7.6% in 2016-17. The survey further said 'agriculture and allied activities' and services are expected to grow by 2.9% and 8.8%, respectively. Industry growth forecast has been placed at 7.6%.

Regarding 2017-18, the forecasters said real GVA is expected to increase by 7.8%, led by growth in services by 9.2%. Agriculture and allied activities and industry are expected to grow by 2.7% and 8%, respectively.

The long-term real GVA growth expectations remained unchanged at 8.3% in the current round compared to the previous round. The medium-term growth forecast for the next five years increased to 8% over 7.8% in previous round.

Private final consumption expenditure at current prices is expected to increase by 10.7% in 2016-17 and further by 11.9% in 2017-18. Forecasters expect gross saving rate at around 31.5% of Gross National Disposable Income (GNDI) in 2016-17 and 32% in 2017-18. 

Further, merchandise exports is likely to grow 1% in 2016-17 which constitutes a downward revision by 70 basis points (bps) from 1.7% in the previous round. Growth of merchandise exports is expected to improve to 5.3% in 2017-18.

Current Account Deficit is projected at 1.1% and 1.5% (of GDP) in 2016-17 and 2017-18, respectively. CPI inflation is expected to be at 5.2% in first quarter of 2016-17 and remain above 5% till fourth quarter of this fiscal.

Centre's gross fiscal deficit (GFD) is projected at 3.5% of GDP in 2016-17 and is expected to moderate to 3.1% of GDP next fiscal.

The results of the survey represent the views of the respondent forecasters and in no way reflect the views or forecasts of the RBI, the central bank said. A total of 23 professional forecasters participated in the survey conducted in May 2016.