Montek pegs growth at 5.5% this financial year

RBI had lowered its growth forecast for the economy from 5.7% to 5.5% during 2013-14

With no signs of an industrial turnround visible, Planning Commission Deputy Chairman Montek Singh Ahluwalia on Wednesday projected India's economy to grow 5.5 per cent for 2013-14 against the Budget assumption of 6.4 per cent. The economy grew at a decade-low of five per cent in 2012-13.

“It will be a good year for agriculture but there is no evidence yet of significant turnround in industry. I guess that a better outcome will be that India will do better than the last year,” he said. In its recent monetary review, the Reserve Bank of India had lowered its growth forecast for the economy from 5.7 per cent to 5.5 per cent during 2013-14.

The first quarter gross domestic product data is slated to come towards the end of this month.

However, sectoral data does not give any evidence of green shoots of recovery. Industrial production grew just 0.1 per cent in the first two months of the current financial year. In fact, it contracted 1.6 per cent in May.

Broad indicators for even services do not indicate any recovery. Services activities contracted to its lowest points at 47.9 points in July, after April 2009 when India witnessed ripple effects of the global financial crisis, according to widely-tracked HSBC purchasing managers' index (PMI) survey. As such, indicators for the second quarter are also not bright. PMI below 50 points means contraction, while a reading above this score means growth.