Ratings agency CRISIL today said a revival in consumption will push up the country’s gross domestic product (GDP) growth rate to 6.7 per cent in FY14, from 5.5 per cent estimated for FY13.
“India’s GDP will grow at a higher rate of 6.7 per cent in 2013-14 in comparison with 5.5 per cent estimated for the current financial year due to a revival in consumption,” the agency’s research division said in a note.
Improvement in the farm sector, lower interest rates and higher government spending will drive the consumption demand, it added.
The estimates from CRISIL come at a time when the economy has witnessed a downward revision of growth estimates by analysts for a better part of the ongoing financial year due to troubles on the global and domestic fronts.
The Reserve Bank had revised its estimate downwards to 5.7 per cent from 6.5 per cent in the October monetary policy announcement.
On the global front, worries around the Euro zone have been a concern while domestically a perception of policy paralysis till September, elevated rates due to inflation and issue of getting faster project clearances did not help.
International rating agencies have also called for immediate action on the high fiscal deficit.
CRISIL said it expects the fiscal deficit to fall to 5.5 per cent in 2013-14 from the 5.8 per cent it estimates for FY13.
It today said the Reserve Bank, whose elevated interest rates have been one of the factors blamed for the lower growth, will cut its interest rates by up to one per cent starting January as inflation moderates.
It expects headline inflation, which is likely to come at around 7.7 per cent for 2012-13, to moderate to around seven per cent next financial year. RBI has been holding to its high rates citing the uncomfortable inflation numbers.
A normal monsoon, stronger rupee and lower crude oil prices will aid the inflation cooling off but it will not come down by much due to upward revision of fuel prices and excess demand for food articles, it said.
On the rupee-dollar front, it expects rupee to trade at 51-52 levels by end FY’14 as against the 53 level it estimates for March 2013.