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 by 8.3 per cent in the current fiscal 90 basis points higher than the 7.4 per cent recorded last year as people especially in rural India will buy consumer durables, fast moving consumer goods as vehicles with the farm income generated due to the rains. One basis point is 0.01 percentage point.
This fiscal rainfall has been just 3 per cent below normal but more importantly according to Crisil, rain has been well distributed.
"For the first time in 3 years, rains were well-distributed – only 33 per cent of the districts saw deficient rains, compared with 49 per cent in 2015 and 46 per cent 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 rain.
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 per cent and agriculture to grow above trend at 4 per cent.
Consumer price inflation would be contained within the RBI's tolerance of 5 per cent (only 10 basis points up on-year) helped by a good monsoon which will cool off food prices.
Crisil expects agricultural GDP to rise by Rs 1.49 lakh crore this fiscal, compared with Rs 97,800 crore in fiscal 2016.