With agriculture income growth at an above-trend four %, India's real gross domestic product (GDP) is expected to grow this fiscal at 7.9 %. The annual retail inflation would remain contained at five %, Indian rating agency Crisil said.
"Net-net, Crisil expects real GDP to grow 7.9 % this fiscal and agriculture GDP at an above-trend four %, while CPI inflation would remain contained at five % up year-on-year," Crisil said in a research note.
The note came ahead of the Reserve Bank of India's RBI) maiden monetary review on Tuesday under a newly constituted Monetary Policy Committee "As for the road ahead, copious reservoirs augur well for the rabi season that starts this month," it added.
Noting that the distribution of monsoon this season has been the best in the last three years, with only a third of the districts seeing deficiency compared with almost half in fiscal 2015 and 46 per cent in 2014, Crisil said.
Crisil also expects nominal agricultural GDP to raise by Rs 1.49 trillion this fiscal, compared with Rs 978 billion in fiscal 2016. "This time around, India's consumption story will have two legs instead of just the urban engine on which it has duked out the past two years," the report said.
"We see private consumption rising 90 basis points to 8.3 per cent this fiscal compared with 7.4 per cent in fiscal 2016. Crisil's state-wise Deficient Rainfall Impact Parameter, or DRIP, scores show all states barring Gujarat, Tamil Nadu and Odisha are above-trend," it added.
With ample rainfall this monsoon, the reservoir storage situation has improved. "Data till September 22 indicates reservoir storage was 17 per cent higher on-year. This should support agricultural production this season and the next," Crisil said.