BMI Research pegs India’s GDP growth at 6.9% this fiscal

Indian economy might recover in the quarters to come, with expectations of a real GDP growth of 6.9% in this financial year, says a report by BMI Research.

The report estimates India's growth to pick up after the impact of 2016 November’s demonetisation drive; however, debt-laden state-run banks will likely stop the recovery before its full potential.

During 2016-17 Q4, the real GDP growth slowed down substantially to 6.1% year-on-year.

"We expect the economy to continue to recover over the coming quarters. We are forecasting real GDP growth to come in at 6.9% in 2017-18," the report said.

The Fitch Group company also noted that the negative demonetisation effects have started to wear off, and the economy might start benefiting from positive demographic trends, greater external stability, which has been possible because of better terms of trade from low oil prices; and continued reforms towards a better business environment.

However, it pointed out the still weaker public banks, which might anchor India's growth potential.

"Despite the Reserve Bank of India's efforts to clean up these bad loans, these will likely take some time to be worked through the system, and therefore, credit allocation to the productive sectors of the economy is likely to be negatively affected," the report said.