India can grow faster over the next five years, but the growth will nowhere be near the nine per cent heyday, market research firm Crisil said in a report.

There is a 50 per cent chance growth will average 6.5 per cent over this period, provided there is a decisive mandate in the ensuing general elections, which will hopefully speed up decision making, and improve the investment climate and competitive efficiencies, it said.

“If everything falls into place — which, to us, has one-in-five odds — growth could rise much above 6.5 per cent,” the report titled ‘Of growth & missed opportunity’ said.

On the other hand, if India misses a decisive mandate or a viable coalition after the battle of the ballot, a sustainable lift to growth won’t materialise. “The odds of being caught in the five per cent rut then rise to around one in three,” it said.

Positive impulses in the next five years will come from some improvement in investment, more so in its efficiency. But these won’t rebound to the levels seen in fiscals 2004-2011, the research report said.

India’s journey towards inclusive development is getting longer and tiresome, and unless the potholes of policy stasis are paved in double-quick time, the aspirations of more than a generation will take a hit, it opined.

Apart from limited upside to productivity improvement over the next five years, what will hinder a return to the nine per cent growth path is the fact that other underlying factors, which once favoured high growth, are not as supportive as they were in the high-growth period of fiscals 2004-2011.

Some of the reasons include the global economy expanding relatively slower pace and therefore, the push to exports will be less strong.

India’s export growth was almost 25 per cent average between 2004 and 2008, led by a rapidly expanding information technology services sector, refined petroleum exports as well as manufacturing exports which were supported by domestic capacity expansion.

In addition, in recent years, failure to address structural issues such as rising wage costs, lack of economies of scale and high domestic inflation have lowered India’s export competitiveness vis-à-vis peers and limited the upside to growth.

(This article was published on April 21, 2014)
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