Ratings agency Crisil today said a revival in consumption will push up the country’s gross domestic product (GDP) growth rate to 6.7 per cent in FY’14, from 5.5 per cent estimated for the current fiscal (FY13).
“India’s GDP will grow at a higher rate of 6.7 per cent in 2013-14 in comparison to 5.5 per cent estimated for the current fiscal due to a revival in consumption,” the agency’s research division said in a note.
Improvement in the farm sector, lower interest rates and higher government spending will drive the consumption demand, it added.
The estimates from Crisil come at a time when the economy has witnessed a downward revision of growth estimates by analysts for a better part of the ongoing fiscal due to troubles on the global and domestic front.
The Reserve Bank had revised its estimate downwards to 5.7 per cent from 6.5 per cent in the October monetary policy announcement.
On the global front, worries around the Euro zone have been a concern while domestically a perception of policy paralysis till September, elevated rates due to inflation and issue of getting faster project clearances did not help.
International rating agencies have also called for immediate action on the high fiscal deficit.
Crisil said it expects fiscal deficit to fall to 5.5 per cent in 2013-14 from the 5.8 per cent it estimates for FY’ 13.
It today said the Reserve Bank, whose elevated interest rates have been one of the factors blamed for the lower growth, will cut its interest rates by up to 1 per cent starting January as inflation moderates.
It expects headline inflation, which is likely to come at around 7.7 percent for 2012-13, to moderate to around 7 per cent next fiscal. The RBI has been holding to its high rates citing the uncomfortable inflation numbers.
A normal monsoon, stronger rupee and lower crude oil prices will aid the inflation cooling off but it will not come down by much due to upward revision of fuel prices and excess demand for food articles, it said.
On the rupee-dollar front, it expects rupee to trade at 51-52 levels by end FY’14 as against the 53 level it estimates for March 2013.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.