A day after finance minister P Chidambaram said that the Indian economy would clock a growth rate of 5% in 2013-14 in the backdrop of a sharp fall in the current account deficit (CAD), industry chambers CII and Ficci echoed the sentiment, though independent analysts preferred to maintain a cautious stance.\
The finance minister, on Monday, said the economy was back on the growth path. “We are satisfied with the Q2 growth rate of 4.8% and we are looking for better performance in the third and fourth quarters.”
India’s GDP growth for the second quarter stood at 4.8% mainly due to robust farm output and a pick-up in exports. Current account deficit (CAD) — the gap between dollar inflows and outflows — also eased to a comfortable level of 1.2% of GDP in the second quarter in figures released on Monday.
“The remarkable improvement in the agriculture sector following good monsoons is expected to support growth in the subsequent quarters. The kharif season has been good and this trend is likely to continue in the rabi season,” said Naina Lal Kidwai, president, Federation of Indian Chambers of Commerce and Industry (Ficci) and country head, HSBC India.
“GDP growth is showing positive trends on the back of good performance of exports and the farm sector… a full-year growth rate of 5.0% is possible,” added Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).
The HSBC’s Purchasing Managers’ Index (PMI) for India — a measure of factory production —rose to 51.3 in November from 49.6 in October —the first positive
reading since July. Above 50 signals expansion.
Economists and think-tanks, however, seemed to prefer a GDP projection below the 5% mark for 2013-14, though they said that the growth rate for October-December
would be about 5% as it would reflect the full impact of the more-than-normal monsoon this year.
“The turnaround in the agriculture sector may push the GDP growth closer to 5%. However, any material impact on growth numbers beyond 5% is only feasible if the services sector posts a growth rate in excess of 6%,” said Soumya Kanti Ghosh, chief economic adviser, State Bank of India.
Rating agency Crisil and banking major Standard Chartered also adhered to their projections of 4.8% and 4.7%, respectively, for 2013-14.
“We retain our projection of 4.8% for the full year,” said DK Joshi, chief economist, Crisil.
Samiran Chakraborty, research head, India, Standard Chartered Bank, said growth in the second quarter was on expected lines. “We had projected a 4.7% growth rate for the full year and we maintain that.”