According to domestic brokerage house IDFC, growth in Asia's third biggest economy is tipped to pick up steam in the ongoing fiscal year led by higher government capital spending while a softening inflationary environment was also favourable for a boost in investment and private consumption.
The Indian economy is expected to witness a growth of 7.7 per cent in FY 2015-16, up from 7.3 per cent in the previous fiscal, IDFC told the PTI.
"We are in a perfect situation, which we have not seen in the last 10 years. We have to board the bus and drive it. We need to capitalise, never did we have a launchpad as superb as this", the brokerage said, the PTI reported.
IDFC pointed out that the current economic recovery cycle will be led by a pickup in government investment as compared to 2003-08 which was primarily driven by investment and private consumption.
The exchequer's revenues will receive a boost from hikes in excise duties on petrol and diesel and a higher service tax rate (which was raised from 12.36 per cent to 14 per cent). At the same time, a reduced oil subsidy bill thanks to the biggest collapse in global oil prices since the Great Recession has ensured that savings on petroleum subsidies can be channelized towards capital expenditure which will boost growth.
Swift execution of key reforms including the GST which has run into political roadblocks will provide a further impetus to economic growth.