Industry body FICCI expects India’s GDP growth for the FY15 at 5.5 percent mainly on the back of improvement in industrial output. FICCI, in its Economic Outlook Survey is expecting industrial sector to recover with an estimated growth of 3.3 percent, while it pegs agriculture and services sector growth at 3.3 percent and 7 percent for the next financial year.
FICCI’s survey, based on the response of economists, has noted that that growth in the fourth quarter of the current fiscal is expected to pick up marginally to 5 percent, thus this means that actual growth for FY14 will be slightly lower than the growth of 4.9 percent projected by the Central Statistical Organization. The participating economists cited delays in government approvals and high cost of borrowing as the key reasons hindering investments. Meanwhile, GDP growth is expected to recover to 5.2 per cent in the first quarter of FY15.
Referring to the inflation outlook, FICCI’s survey noted that both WPI and retail inflation rates would remain range bound in coming future. As per the survey, inflation based on Wholesale Price Index (WPI) is expected to stay at about 5.5 percent in FY15 and CPI inflation will be at about 7.9 percent during the next fiscal. The economists’ opinion was divided on CPI becoming the new anchor for the Reserve Bank's monetary policy. The survey added that some economists favored CPI as a good indicator for monetary policy, while others were of the opinion that a single parameter may not be a correct approach adding that CPI is a fairly new series available only since 2011 and hence does not adequately portray the underlying trends.
The survey further forecasted the fiscal deficit as a percent of GDP stands at 4.4 percent for FY15, which is higher than the 4.1 percent estimate announced in the Interim Budget last month. Subsidy burden continues to remain an issue for the government and can further lead to fiscal slippages. Regarding the country’s external sector, the survey expected that the country’s current account deficit (CAD) to remain in the comfort zone at 2.2 percent in 2014-15 and rupee value to remain at 61 against the US dollar by March-end 2015.
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