India’s economic growth is likely to touch 5.5 per cent in 2014-15 as the industrial output will expand at 3.3 per cent, according to FICCI.
The Economic Outlook Survey by the industry chamber pegs agriculture and services sector growth in the next financial year, starting April 1, at 3.3 per cent and 7 per cent, respectively.
It also estimates that the growth will pick up marginally to 5 per cent during the last quarter of the current fiscal.
“However, this might imply that actual growth in the year 2013-14 will be slightly lower than the growth of 4.9% projected by the Central Statistical Organization some time back,” FICCI said.
WPI, retail inflation
On inflation, it said that majority of the participating economists felt that going ahead both WPI and retail inflation rates would remain range-bound.
Inflation based on the Wholesale Price Index (WPI) is expected to stay at about 5.5 per cent in 2014-15 and the one based on the Consumer Price Index (CPI) will be at about 7.9 per cent, as per the survey.
On CPI becoming the new anchor for the Reserve Bank’s monetary policy, the opinion was divided. Some economists felt that it is a good indicator, while others were of the opinion that monetary policy decision on the basis of a single parameter may not be a correct approach.
Moreover, they said that CPI is a fairly new series available only since 2011 and hence does not adequately portray the underlying trends.
Further, the median forecast for fiscal deficit as a per cent of GDP stands at 4.4 per cent for 2014-15. This is higher than the 4.1 per cent estimate announced in the Interim Budget last month. Subsidy burden continues to be a bothering factor and can lead to fiscal slippages, according to the economists polled by FICCI.
On the external sector, the survey pegs the current account deficit (CAD) to remain at 2.2 per cent in 2014-15. Moreover, the rupee value is projected at 61 against the US dollar by March-end next year.
The participating economists cited high cost of borrowing and delays in government approvals as the key reasons hindering investments.