Buoyed by rising output of intermediate goods as well as tourist earnings and the government's reform initiatives, business climate in India improved in May as against the same month last year. As per the 'BluFin Business Cycle Indicator (BCI)', which reflects various macroeconomic trends on a monthly basis, stood at 166.3 points in May, 5.8% higher compared to the same month last year, which suggest that the Indian economy is growing at a faster rate than the previous year.
Further, as per the report, the government has been instrumental in boosting infrastructure investments, generating a consistent improvement in the production of intermediate commodities such as pig iron and aluminium, along with prudent management of non-plan expenditures, easing liquidity conditions and strengthening capital markets. Moreover, timely regulatory reforms are ensuring a steady increase in foreign direct investment in the country, it added.
Indicating a reversal in the economic slowdown since July 2012, financial information provider BluFin expects that Indian economy would grow at 5.3% in the first quarter of financial year 2013-14. It also added that the continued uptrend in the BCI is consistent with the released GDP numbers. If fiscal policy stays restrained, and monetary easing continues at an accelerated pace, a genuine economic recovery is possible in future.
However, the report also highlighted that despite a slowdown in gold and oil prices and a decline in domestic inflation, foreign exchange and international trade continue to be a concern. A surge in domestic gold demand is hindering effective management of the Current Account Deficit (CAD).
