The Fastest Growing Major Global Economy In The World

India remains one of the fastest growing emerging market economies driven by key structural reforms, normal monsoon and reduced external vulnerabilities.

- V Srinivas

On February 28, 2017, India’s quarterly estimates of Gross Domestic Product (GDP) growth rate have projected the Q3 GDP estimates at 7 percent. India remains one of the fastest growing emerging market economies driven by key structural reforms, normal monsoon and reduced external vulnerabilities. Inflation has declined from 6 percent in July 2016 to 3.4 percent in December 2016. The Government has continued to adopt the path of fiscal consolidation and the Reserve Bank of India has maintained an accommodative monetary stance. The current account deficit remains manageable and international reserves standing at US$360 Billion are at their highest levels. External vulnerabilities remain subdued. It also appears that the post-November 8, 2016 decision to withdraw the legal tender character of all Rs. 500 and Rs. 1000 notes and the re-monetization initiative has not undermined the growth momentum.

The macroeconomic scenario looks quite bright with the Union Budget adopting a fiscal consolidation path having achieved the fiscal deficit target of 3.5 percent of GDP in 2016-17 budget. Fiscal deficit is projected to further decrease to 3.2 percent of GDP in 2017-18. The revenue deficit is envisaged to reduce from 2.1 percent of GDP in 2016-17 to 1.9 percent of GDP in 2017- 18. Continued progress in reforms provides a healthy environment for a marked improvement in medium-term prospects.