Mumbai: International rating agency Fitch Tuesday said India's economic growth will accelerate to 5.5 percent this financial year and 6.5 percent in FY16 due to the clear mandate received by the pro-reform Narendra Modi government.
"The clear electoral mandate of the BJP-led government gives it the ability to pursue far-reaching economic reforms...We have increased our GDP growth forecast for FY16 to 6.5 percent from 6 percent and project real GDP growth to pick up to 5.5 percent in FY15," it said.
The agency said announcements by Modi and Finance Minister Arun Jaitley after government formation "signal a strong intention to pursue reforms".
It said the budget will give more indications on the government's policy intentions and implementation of the measures will clarify the level to which growth can be boosted.
"Previous periods of high growth illustrate that potential for significantly higher growth rates certainly exists, but that would imply higher savings rates - including through fiscal consolidation, productivity gains through reforms, for instance related to governance, and product and labour markets, and the elimination of infrastructure bottlenecks," Fitch said.
The agency, along with rival Standard & Poor's, had said it would downgrade the sovereign ratings to junk about two years ago on concerns over the widening fiscal deficit and low growth. A lack of decision-making by the previous government had also featured prominently in the commentaries.
While Fitch did not say anything about the possible impact on the sovereign rating, it said the likely impact from a below-par monsoon has been considered while arriving at the growth estimate of 5.5 percent for FY15.
The agency said there will be significant risks to growth if the monsoon turns out to be much weaker than the Met's projection of rainfall likely to be 93 percent of the long-period average due to the high probability of an El-Nino event in the Pacific Ocean.
A weak monsoon is likely to hit already-high food inflation even as retail or consumer price inflation was at 8.3 percent in May, it said.
However, it hinted that food inflation will remain contained on recent government announcements on reforms in agriculture produce markets and food distribution fronts, as also the Reserve Bank of India's resolve to get CPI down to 6 percent by January 2016.
In an official statement, Singh said he assured the delegation that "the Centre will look into the problems of Maharashtra farmers, especially to deal with any low-rainfall situation."
The minister said many parts of Maharashtra are prone to low rainfall and drought and he has been informed that the water level in reservoirs is going down.
"The Agriculture Ministry is, therefore, closely monitoring the progress of monsoon, especially over dryland areas," Singh said.
In case of poor or scanty rainfall, the contingency plan will be put into operation in affected districts, he said, adding that his ministry is moving a cabinet note on actions to be taken for mitigating the impact of a poor monsoon.
While assuring the delegation he would consider their demands, Singh said the Centre will create research and development infrastructure to support long-term growth of agriculture in the state.
The delegation sought establishment of a central agricultural university in areas where there are more instances of farmers suicides and a second Krishi Vigyan Kendra in bigger districts such as Sangli, Jalgoan, Yavatmal, Nagpur and Jalna.
They also demanded that the Indian Council of Agricultural Research set up institutes on diary farming, soil and water testing, integrated pest management and horticulture.
