Indian GDP growth has bottomed out in H1CY14: ICRA

India Infoline News Service | Mumbai |

The structural issues contributing to the stagnation in the manufacturing sector need to be addressed urgently

The initial growth estimate for Q4FY14 exceeds our forecast (4.4%), on account of higher-than-expected agricultural growth. Healthy groundwater levels and substantial precipitation boosted agricultural growth to 6.3% in Q4FY14 as compared to the 1.6% rise in Q4FY13, belying concerns of crop damage following hailstorms in February 2014.
 
The structural issues contributing to the stagnation in the manufacturing sector need to be addressed urgently. Well-designed policies to simultaneously enhance skill development and ensure job creation are crucial to realize India’s long term growth potential and make the demographic dividend a success. 
 
ICRA believes that Indian GDP growth has bottomed out in H1CY14, and we expect a mild improvement in the pace of growth from 4.7% in 2013-14 to 5.0-5.5% in 2014-15, factoring in a muted pickup in manufacturing growth and investment activity in H2FY15. However, the extent and pace of reforms as well as the ability to revive the investment cycle would determine whether GDP growth can accelerate to levels well above 6% over the medium term.


Aditi Nayar, Senior Economist, ICRA Ltd
 

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