India’s Economy Turnaround: FICCI Projects 5.6% Growth In FY2015

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India’s Economy Turnaround: FICCI Projects 5.6% Growth In FY2015
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India's gross dosmestic product (GDP) will accelerate to 5.6% during financial year (FY) 2014-15, said the Federation of Indian Chambers of Commerce and Industry's (Ficci) latest Economic Outlook Survey.

The survey further reveals economic activity is expected to continue with this momentum in the second half of the current fiscal, Ficci said.

"The new government guided by the objective of restoring growth and governance has given very positive policy signals in its first 100 days. We see the confidence amongst investors slowly returning and hope that going ahead, the momentum on implementation front will build up," said the survey.

While agricultural growth is expected to remain steady despite a delay in monsoon, the industrial sector is expected to grow by 4.7% in 2014-15 fiscal. This is 1.6% points more than the growth estimate in the previous survey round conducted in June 2014, the association of business organisation said.

Retail inflation is expected at 7.8% this fiscal, in sync with the Reserve Bank of India's (RBI) target indicated earlier this year.
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The economists who participated in the survey also felt that the RBI will consider a cut in policy rates only in the first quarter of the next calendar year. According to them, the India’s central banking institution will wait and watch until there are definite signs of inflationary pressure abating.

As per Ficci, the minimum and maximum range for GDP growth in the current fiscal is indicated at 5.3% and 6%, respectively, as against 5.3% estimated in the previous round, reflecting optimism.

The projection by the economists regarding exports and the current account deficit (CAD) reflected no imminent risks. The CAD to GDP ratio for the fiscal was projected at 1.9%.

The economists also identified some priority areas for the government: developing a world-class infrastructure, ensuring uninterrupted power supply, resolving labour issues and minimising procedural hassles and fast-tracking approvals.

As the new Indian government is taking constructive measures to get back the economy on the growth track, the economists believe that the macro-economic fundamentals are gradually strengthening.
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(Image: The Economic Times)