The finance ministry expects the Indian economy to grow at 5.5% in 2013-14, moderately faster than last year’s decade-low 5% growth, buoyed by robust farm output and revival of stalled infrastructure projects.
“Following three quarters of sub- 5% growth, growth is expected to pick up from second quarter of 2013-14 resulting in full year growth of around 5.5%,” the ministry said in its first-of-a-kind first quarter review of the economy released late Tuesday evening.
The finance ministry’s growth forecasts were in sharp contrast to the International Monetary Fund’s (IMF’s) estimates, which on Tuesday lowered its projection of India’s growth rate to 3.75% in 2013 from 5.7% estimated earlier on account of poor demand and weak manufacturing and services sector performance.
“In India, growth in fiscal year 2013 is expected to be around 3.75%, with strong agriculture production offset by lacklustre activity in manufacturing and services, and monetary tightening adversely affecting domestic demand,” the IMF said in its latest World Economic Outlook report.
The finance ministry’s forecasts were still about a percentage point lower than its projections in February when it had estimated that India’s GDP would grow in the range of 6.1-6.7% in 2013-14.
“Key factors that are responsible for lowering the growth forecast are: downgrade in the global growth forecasts by the IMF, backlog of stalled projects and the uncertainty created by currency volatility,” it said.
Further, various indicators such as industrial production and auto sales suggest that the sluggish trend is likely to continue for some more time, it said.