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Indian economy will grow 6% in 2014-15: Crisil
COIMBATORE: Indian economy will grow 6% in 2014-15 compared with an expected 4.8% growth in 2013-14, ratings agency Crisil has said.
The forecast is premised on normal monsoons, continuation of the recent reform process and widely anticipated global recovery.On the downside, growth could weigh in below 5% yet again if the above assumptions do not play out, according to the agency.
We believe the pick-up will be aided by implementation of stalled projects, de-bottlenecking of the mining sector and a recovery in industry on higher external demand," Crisil said. "We also expect some rebound in services growth in 2014-15 led by higher exports as well as a positive rub-off from higher industrial growth," it said.
"Finally, we assume a normal monsoon year, which will cushion growth and help in taming inflation," the agency said.
The growth forecast is also supported by improved global outlook. Ratings agency Standard and Poor's expects US GDP (gross domestic product) growth to rise to 2.8% in 2014, from 1.7% in 2013, while the Eurozone economy is forecast to expand by 0.9% after two years of recession.
"The GDP forecast for the next fiscal is driven by a partial unclogging of domestic policy logjam as well as improved global growth prospects," Crisil stated. "This, together with improved private consumption demand, will trigger a mild revival in industrial growth to 4% in 2014-15," it said. Sectors such as consumer durables, automobiles and textiles will gain from this revival.
"Higher industrial growth will also have a positive rub-off on some services sectors such as trade, transport and banking," Crisil's team of economists led by chief economist Dharmakirti Joshi said. Higher exports growth, especially by the IT/ITES sector, will provide additional thrust.
"Overall, we expect the service sector growth to lift to 7.6% in the next fiscal," the economists predicted.
A pick-up in consumption from its current lows on the back of moderation in inflation and a bumper rabi crop harvested in 2014 that would raise farm income will help the recovery. While a decisive mandate in the general elections could add further momentum, even a fragile political outcome would not derail reforms, the economists said.
"Policy reforms could gain further momentum after elections if there is a decisive mandate," they said. "Even with a fragile political outcome, we believe that the reforms that are already underway are unlikely to be reversed and will begin to bear fruit in 2014," the economists stated.