India’s growth rate is set to rise over the coming year after a slowdown, according to a government forecast.
It predicts that economic growth in 2017-18 will be between 7% and 7.5%, after having fallen to 6.75% in the current fiscal year.
This will help India regain its position as the world’s fastest growing major economy, the government said.
The finance ministry released its figures in an economic survey ahead of the federal budget on Thursday.
India’s recent slowdown has been blamed on several factors, including declining exports and falling private investment.
Also the sudden cancellation of nearly 86% of the cash in circulation in November 2016 – the effect lasted until 2017 – and glitches in the rollout of a single Goods and Services Tax (GST) had a severe impact on growth.
“The forecast builds in some risks to growth, particularly the oil price risk. If oil prices stay firm or rise from these levels, we would look at the 7%,” Abheek Barua, chief economist of HDFC Bank told Reuters news agency.
“It’s a conservative and credible band. There could be a potential upside from here if oil prices moderate quite substantially and you see a pickup in domestic demand components.”
India imports more than 70% of its oil to meet domestic demand.
The International Monetary Fund (IMF) projects the Indian economy to grow at 7.4% in 2018.