Could this be real? A 7 per cent GDP growth rate in the second half of this fiscal, and a US dollar at Rs 44?
The experts seem to have turned gung-ho on India. Financial services provider Barclays Capital, for one, believes growth would accelerate in the second half of 2009.
“The worst is over,” said Sailesh Jha, Director, Asian Economic Research, Barclays Capital. He predicted an overall GDP growth of 7 per cent for 2009-10 and 7.5 per cent in financial year 2010-11.
With reduction in global risk aversion and improving growth, large increase in capital inflows is also expected.
Standard Chartered Bank (SCB) has raised its Rupee rating from ‘Neutral’ to ‘Overweight’. The bank had predicted the rupee would hover around 47 against the US dollar. Barclays has pitched the rupee to hit about 44 per US dollar by March 2010.
Both banks predict improved balance of payments (BoP) position, with Barclays predicting a BoP surplus beginning the second quarter of 2009-10. SCB expects a BoP surplus of Rs 61,933 crore.
The other silver lining for India is the narrowing trade deficit. According to SCB, the trade deficit balance has shrunk for seven straight months, from Rs 66,221 crore to Rs 19,056 crore in March 2009. This is expected to lower the current account deficit to -1.2 per cent of GDP from -2.8 per cent in the financial year 2008-09.
The respected Centre for Monitoring Indian Economy (CMIE) has said the Indian economy is likely to grow at 6.6 per cent in the current fiscal year.