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FICCI lowers Indian economic growth forecast to 5.3 percent for FY15

09 Jul 2014 Evaluate

Industry body FICCI has lowered Indian GDP growth forecast to 5.3 percent for the current fiscal, as compared to 5.5 percent growth projected earlier. FICCI, in its latest Economic Outlook Survey, has noted that sub-par monsoon forecast would impact performance of the agriculture sector which in turn will affect Indian economic growth prospects. Agricultural sector comprises around 15 percent share in Indian GDP.

FICCI expects Indian economic growth at 5.3% in FY15 with a minimum and a maximum range of 4.9 percent and 5.8 percent. Sector wise, the survey pegs agriculture growth at 2.1 percent and industrial growth at 3.1 percent for FY15. Further, services sector growth is expected at 7 percent, marginally higher than 6.8 percent recorded in the previous fiscal year. The FICCI’s survey forecasts fiscal deficit to GDP ratio at 4.5 percent in FY15 which is higher than the target of 4.1 percent set in the interim budget. On inflation front, the survey participants expects that El Nino effect to fuel inflationary pressure going ahead and prices to remain beyond the comfort zone. Participating economists suggested that the government should strengthen supply side infrastructure to check the rising inflation in the country. India's economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14

Recommending measures to boost Indian economic growth, the survey respondents have asserted that the government should clear roadmap for roll out of Goods and Services Tax and review of the Direct Tax Code in order to widen the tax base and rationalizing exemptions. The government should chart out a path to contain subsidies and switch the focus from non-plan to plan expenditure, while putting across a roadmap for disinvestment. Besides, greater clarity on issues like General Anti Avoidance Rules (GAAR) and retrospective taxation must be provided in the upcoming budget. The respondents also recommended firming up the growth in the manufacturing sector to aid employment generation and to boost infrastructure spending, along with faster execution of stuck projects.

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