S&P revises GDP forecast to 7.9% in FY16

Mumbai, February 26

Terming India as the "bright spot" in Asia Pacific, Standard & Poor's today sharply revised upwards country's GDP forecast to 7.9% next fiscal and even higher 8.2% in the year after. The revision comes within days of it flagging concerns over low per capita income and high fiscal deficit. It also comes just two days ahead of the Budget.

"India should be the Asia-Pacific region's bright spot," S&P said and revised steeply upwards its growth estimates. The rating agency said economic growth will rise to 7.9% in FY 2016, up from its previous estimate of 6.2%, and will go up further to 8.2% in FY 2017 as against 6.6% estimated previously.

The agency, which rates India among the lowest in the investment grade at BBB-, said the rising investment and low oil prices are the primary factors boosting the chances for the economy.

It may be noted that the government had earlier this month changed the methodology of computing GDP, which showed a dramatic increase in GDP growth to 6.9% from the earlier 5% in FY2014, and 7.4% for this fiscal, up from a projected 6%.

In a brief note sent to the press by the rating agency, it is unclear if Standard & Poor's is re-pegging its estimates based on the revisions in GDP computation or not. In the note, the agency said growth in the Asia-Pacific region will be slightly lower, but India's "star is rising". — PTI