India projected to grow at 6.8 pc in FY27, can become transit hub for global tourists
New Delhi, April 18
India, which entered the global geo-political conflict from a situation of strength, is projected to grow at 6.8 per cent in FY27, as fears of super El Nino could cloud growth estimates, with inflation average at 4.5 per cent, an SBI Research report said on Saturday.
"India continues to demonstrate resilience with GDP likely to grow in the range of around 6.8 per cent-7.1 per cent, despite global uncertainties and regional conflicts," said the report.
The gross fiscal deficit for FY27 is estimated at Rs 16.95 lakh crore, or 4.5 per cent of GDP for FY27 (2022-23 base).
With an estimated hike in subsidies of Rs 60,000 crore and expected loss of Rs 1.1 lakh crore due to excise duty cuts, there will be an additional fiscal burden of Rs 1.7 lakh crore. With this, the gross fiscal deficit could go up to Rs 18.7 lakh crore.
Consequently, CPI trajectory (as of now) may indicate more than 4.5 per cent inflation for the Q2 and Q3 quarters, though the FY27 projections are well under the RBI's target range.
Subsequently, in FY27, the report expects 10-Yr G-sec yield to remain in the 6.75 per cent-7.0 per cent band, with a downward bias should the calm after the conflict prolong materially, attuned to higher gross borrowing plan, persistent geopolitical risks, and inflation concerns stemming from volatile oil prices.
"With disruptions shaking the Middle-East, India can position itself as transit hub for international tourists. With sky becoming unsafe over parts of Mideast/the UAE, airports in China and India could gain ground in global aviation as the Iran conflict disrupts traditional routes through the Middle East, creating an opening for alternative transit hubs," the report mentioned.
However, this may require investments in airport infrastructure, connectivity and passenger experience.
— IANS
Reader Comments
Good growth numbers, but the fiscal deficit going up to nearly Rs 19 lakh crore is worrying. Where is this money coming from? As a middle-class taxpayer, I hope this doesn't mean more taxes for us. The transit hub idea is good, but first fix the basic infrastructure and cleanliness at our existing airports.
The projection seems optimistic given the global headwinds. El Nino can seriously impact our agricultural output and push food inflation beyond 4.5%. We need to be cautious. On the transit hub front, it's a golden opportunity. Let's leverage our geographic location between East and West.
Becoming a transit hub is a strategic masterstroke. While Dubai and Doha face uncertainty, India can capture that market. But this requires massive investment in airport infrastructure, as the report says. Hope the government fast-tracks projects like the Navi Mumbai airport. Jai Hind!
As someone who travels frequently to India for work, I think the transit hub idea has great potential. The hospitality is unmatched. However, seamless connectivity between domestic and international terminals and easier visa processes would be key to attracting transit passengers.
Growth is good, but is it inclusive? The report mentions subsidies hike and excise duty cuts leading to a fiscal burden. We need to ensure this growth translates to better jobs and controlled prices for the common man. Inflation at 4.5% still pinches the average household budget.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.