India’s GDP to Grow at 5.6 Percent in 2014-15
DELHI – Gross domestic product (GDP) growth in India is expected to pick up in 2014-15 to 5.6 percent, according to an analysis conducted by Citigroup. The forecast puts the country’s economic expansion at over ten percent greater than last year’s growth, which is estimated by the Central Statistics Office to have been 4.9 percent during the 2013-14 fiscal year, which ended this March.
Following several years of GDP growth greater than 7 percent, India’s economic growth slowed to a decade-low 4.5 percent in fiscal year 2012-13 due to a contraction in the country’s manufacturing, services and agricultural sectors.
Despite poor performance over the last two years, many are optimistic about India’s future as the country holds general elections for the 16th Lok Sabha. Among the election’s front-runners are the incumbent Indian National Congress Party and the Bharatiya Janata Party, both seen as business friendly and offering plans for economic reform in their election manifestos.
Last year’s slight improvement in economic growth, while generally thought the have been below India’s full potential, was still lauded as a sign that greater growth is to come. C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council, said the growth numbers were “encouraging news indicating that [the] slowdown has bottomed out.”
Following last year’s growth trajectory, Citigroup expects India’s economy to make greater gains in the current year. “While recent macro data has stayed sluggish, we maintain our expectation of a modest recovery in FY15 GDP to 5.6 percent,” stated the Citigroup report.
“A poor-bad monsoon could be a downside risk to our estimate but a decisive election outcome and consequent uptick in consumer and business activity could offset such risks to some extent,” the study further elaborated.
Raghuram Rajan, Governor of the Reserve Bank of India, reiterated these expectations this week during a talk at Oxford University. “The economy has been growing at a flat rate of 5 percent and hopefully we will see it picking up in the near future,” he commented, adding that post-election growth should speed up as the newly-throned government implements pro-business policies.
In a sign of things to come, the World Bank announced last week that India has overtaken Japan as the world’s third largest economy, as measured by purchasing power parity, and several multinational firms, such as Amazon.com and ebay.com, have been jockeying for position to take advantage of the country’s growing consumer base and competitive manufacturing costs.
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