HSBC on Thursday said that it expected India’s Gross Domestic Product to grow by 7.1% for the 2017-2018 financial year. In a report, the institution’s Chief India Economist Pranjul Bhandari said the country’s growth would largely be driven by the remonetisation process with schemes announced in this year’s Budget supporting demand, PTI reported.

The country will get “sufficiently remonetised” by the end of April and this will allow consumption to reach pre-demonetisation levels, Bhandari said. However, economic growth will be largely consumption-driven as investment is expected to remain weak, he added. “We believe that investment, which tends to be sensitive to policy uncertainty, will continue to remain weak, keeping growth at an arm’s length from the cherished 7.5%-8% levels,” he said.

The report further said that the Reserve Bank of India was losing a chance to implement a policy rate cut because of factors such as rising oil prices, higher government wages and the chance of a rate hike by the United States Federal Reserve. “We expect one final 25 basis points rate cut,” Bhandari said. The RBI, which cut its policy rate by 0.25% to 6.25 in October 2016, will hold its next monetary policy meeting on February 8.