All Good Things To Happen Says India Ratings & Research
Priyanka Kumari / 15 Jan 2014
India Ratings & Research, a Fitch Group company feels that the Indian economy will see some very positive fundamental changes in FY15 including a higher GDP growth and lower fiscal and current account deficits.
India Ratings & Research, a Fitch Group Company has forecasted an improvement in the Indian GDP for FY15 and Indian economy expecting it to grow at 5.6%. As per the report, the GDP is likely to improve mainly due to the partial recovery in the industrial sector which will is forecasted to grow by 4.1%. The Services sector is expected to pick up and grow at 6.9% in FY15. The industrial growth in FY15 is likely to be the highest since 2012, backed by the rise in rural and export demand. The rural demand in the financial year 2015 is expected to remain strong following a stable growth in the agricultural sector. In addition, export demand is also foreseen to grow backed by the recovery in major export markets of USA and Europe.
It also says, normal monsoon in 2014 will ease food price pressure. The Wholesale Price Index (WPI) is expected to moderate to 5.5%. In the past few months, food inflation had spiked due to higher food prices. However, food inflation has come down in the month of December 2013. The report also mentions about the possibility of the RBI reducing key policy rates by 50 basis points in FY15, in the wake of moderate inflation.
Further, the report also expects the current account deficit position to improve. Current account deficit (CAD) for FY15 is forecasted to settle at 2.2% of the GDP, on account of the improvement in industrial growth and the improved demand in the US and Europe leading to higher exports. It expects the INR to appreciate to 56-57 per USD for the said fiscal.
For FY15, the fiscal deficit is expected to stand at 4.5% of the GDP, as the government is likely to reduce its planned expenditure to keep the fiscal deficit near to the budgeted number.
Moderate inflation will ensure that consumption does not pick-up sharply in FY15, whereas, the investments growth is expected to come in at around 6.2% and show a good performance.
With the improvement in the current account and currency (INR), it expects the fiscal deficit to remain near to the budgeted figure.
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