Economy to grow at 7.4% next fiscal: Ind-Ra

New Delhi: The Indian economy is likely to grow by 7.4 percent in the next fiscal year, India Ratings and Research (Ind-Ra) on Tuesday said.

"India Ratings and Research expects the gross domestic product (GDP) to grow 7.4 percent year-on-year in FY18...Ind-Ra, however, has revised down GDP growth estimate for 2016-17 to 6.8 percent from 7.9 percent, which is even lower than Central Statistical Organisation's advanced estimate of 7.1 percent," the rating agency said in a statement.

Backed by consumption demand and government spending, the gross value added of the three production sectors -- agriculture, industry and services -- would grow at 3 percent, 6.1 percent and 9.1 percent year-on-year respectively in 2017-18, the agency said.

"While private final consumption expenditure is expected to grow at 8.9 percent, the government final consumption expenditure is expected to clock 9 percent growth in 2017-18," it said.

The rating agency said that it expects the current account deficit to come in at 1 percent of the GDP in 2017-18 as against 0.9 percent in 2016-17.

"This will help the rupee trade at an average 69.18/USD in FY18," it noted.

Observing that while India is likely to face continued headwinds on the exports front due to the play out of Brexit and the anti-globalisation stance of US President Donald Trump, it pointed out that imports are unlikely to pick up so long as the domestic investment cycle does not revive.

As against the popular perception, Ind-Ra said the main setback to investment growth came from the negative 2.2 percent growth in the gross fixed capital formation (GFCF) of household sector.

Ind-Ra expects GFCF to grow at 4.9 percent in 2017-18.

India's economic growth forecast of 7.4 percent by Ind-Ra in 2017-18 is on the upper end of the 6.75 to 7.5 percent band estimated in the Economic Survey.