The GDP growth estimate by ratings and research firm Crisil was reduced to a decade-low of 4.8 per cent (from 5.5 per cent as estimated in June) in 2013-14, according to its report.
Roopa Kudva, Managing Director & CEO, Crisil, said, “With luck, if agriculture surges 6 per cent, it could push overall GDP growth to 5.2 per cent.”
In its report State of the Nation, Crisil said the economy will stay in an L-shaped trajectory through this fiscal, unlike the V-shaped recovery seen after the Lehman crisis in 2008.
The study using data on 2,481 companies across more than 70 sectors said demand slowdown and the collapse of the investment cycle would severely dent the infrastructure, capital goods, automobiles and real estate sectors.
The report highlighted that farm or agriculture GDP growth could more than double from the last year’s 1.9 per cent to 4.5 per cent due to a well-distributed monsoon. This would help check food prices and support rural consumption.
Services, which have been the bulwark of the economy for several years, would grow at just 6.5 per cent this fiscal compared with nearly 10 per cent through the last decade.
Larger firms with operating income over Rs 1,000 crore were more severely impacted by higher levels of indebtedness and increasing stress on financing cost.
“Stretched working capital cycles are aggravating liquidity pressure on companies. Overall, liquidity pressures are a source of stress for 16 per cent of the companies analysed; but for larger firms it is higher at 27 per cent,” Kudva said.
Rupee at 60
According to Kudva, rupee depreciation has increased India’s currency competitiveness.
“The rupee could rebound to 60 per US dollar by March 2014 as the current account deficit declines to 3.9 per cent, but the currency will remain significantly depreciated as compared with last fiscal. Hence, export-linked sectors such as IT-ITES, pharmaceuticals, textiles, readymade garments and cotton-yarn spinning will do well,” she said.
Though as far as growth of companies is concerned, forex volatility is the least of the sources of stress for 2,481 companies and it affects only 6 per cent of them, Kudva said.