Real GDP rose by +7.2% y/y in Q4 2017 (up from +6.5% in the previous quarter) driven by a strong performance in manufacturing and construction. On the expenditures side, strong growth in investment (+12% y/y) offset weaker growth in private consumption (+5.6% y/y). Monthly indicators point to solid growth in 2018. Infrastructure output rose by +6.7% y/y in January (compared to +4.2% in December). The manufacturing PMI signaled expansion in both January (52.4) and February (52.1). Meanwhile, the authorities continue to pursue prudent economic policies. The central bank has maintained its cautious accommodative stance with a low policy rate but does not give any hint of further easing. On the fiscal side, the government has slowed the budget consolidation process: the deficit is expected at -3.5% of GDP in FY2017-18 (the fiscal year in India ends on 31 March) and -3.3% in FY2018-19, compared to the initial targets of -3.2% and -3%, respectively. Euler Hermes forecasts economic growth of +6.7% in FY2017-18, followed by +7.3% in FY2018-19.