Economic Outlook Survey of FICCI (Federation of Indian Chambers of Commerce and Industry) was released on 13 September 2014. The Survey estimated that India’s Gross Domestic Product (GDP) is expected to expand by 5.6 percent during financial year 2014-15.
The expected growth rate of 5.6 percent is an improvement over the 5.3 percent estimate that was indicated in the June 2014 edition of Economic Outlook Survey.
The increase in GDP’s expected growth rate reflects a clear return in optimism and the economic activity which is expected to continue with this momentum in the second half of 2014-15.
Highlights of the Economic Outlook Survey
• The minimum and maximum range for GDP growth in the financial year 2014-15 was indicated at 5.3 percent and 6.0 percent respectively.
• The agricultural growth is expected to remain steady despite a delay in the monsoons.
• The industrial sector seems to have improved considerably and is expected to grow by 4.7 percent in financial year 2014-15, which is 1.6 percentage points more than the growth estimated in June 2014.
• The growth in the services sector is expected to remain pretty much at similar levels as reported in June 2014. The sector is likely to grow by 6.9 percent in 2014-15.
• Inflation is expected to ease somewhat compared to the last year and the annual average CPI inflation rate is projected at 7.8 percent in 2014-15. However upside pressures on inflation may still arise.
• The household inflationary expectations remain high and the RBI will wait and watch until there are definite signs of inflationary pressure abating then expect a cut in the key policy rates.
• The exports and current account deficit (CAD) reflected no imminent risks. The CAD to GDP ratio for 2014-15 was projected at 1.9 percent.
• The foreign institutional investment (FII) inflows will continue in the second part of the year as well, although at a slower pace.
• Though some risk factors remain on account of -recent spate in geo political tensions, US announcing next round of its tapering programme and withdrawal of restrictions imposed on gold which might exert pressure on imports and these will be counter balanced by positive factors which most likely are expected to dominate.
• Some of the priority areas identified included the need to build world class infrastructure, assure provision of quality and uninterrupted power supply, resolving labor issues, and working out an easy land acquisition process.
• It was clearly highlighted where the Union Government should seek to get the basics right to assure a more conducive environment for manufacturing activities which needed to work on this with immediate effect.
When: 13 September 2014