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Consumption boost to support GDP: Crisil

Private consumption will grow 8.3% in the current fiscal, 90 basis points higher than the 7.4% recorded last year as people, especially in rural India.

, ET Bureau|
Updated: Oct 03, 2016, 09.00 AM IST
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Rainfall this fiscal has been just 3% below normal but more importantly, according to Crisil, the rains have been well-distributed.
Rainfall this fiscal has been just 3% below normal but more importantly, according to Crisil, the rains have been well-distributed.
MUMBAI: India’s gross domestic product (GDP) will be supported by a boost from consumption, especially in the hinterland, after a well distributed monsoon this year, credit rating agency Crisil said.

Private consumption will grow 8.3% in the current fiscal, 90 basis points higher than the 7.4% recorded last year as people, especially in rural India, will buy consumer durables, fast moving consumer goods and vehicles with the higher farm income generated due to an almost normal monsoon.

Rainfall this fiscal has been just 3% below normal but more importantly, according to Crisil, the rains have been well-distributed.

“Only 33% of the districts saw deficient rains, compared with 49% in 2015 and 46% in 2014. Moreover, more than half of these deficient districts are well-irrigated and the many that are not are agriculturally less relevant,” Crisil economists Dharmakirti Joshi, Dipti Deshpande and Sakshi Gupta said in a report.

Crisil’s analysis shows that all states except Gujarat, Karnataka, Tamil Nadu and Odisha received above-trend rains.

The near perfect distribution of monsoon has also filled reservoirs, which will also help the winter rabi crop later in the year while the area under kharif cultivation has inched up to 1,060 lakh hectare compared with 1,052 lakh hectare last year. Crisil expects India’s GDP to grow at 7.9% and agriculture to grow above trend at 4%.

Consumer inflation would be contained within the RBI’s tolerance zone of 5% helped by a good monsoon Crisil expects agricultural GDP to rise by Rs 1.49 lakh crore this fiscal, versus Rs 97,800 crore in 2015-16.

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