May 30, 2013, 08.31 PM | Source: CNBC-TV18
Prime Minister Manmohan Singh can look forward to a weekend of soul searching and harsh criticism. His government's efforts to kick the economy into higher gear have not worked wonders.
Also read: See FY13 GDP over 5%, CRR cut in June: SBI's Chaudhuri
Prime minister Manmohan Singh can look forward to a weekend of soul searching and harsh criticism. His government's efforts to kick the economy into higher gear have not worked wonders. And while Singh is reconciled to GDP growth at a 10-year low of 5 percent in FY13, he blames this on factors beyond his control.
Manmohan Singh said, "Our growth rate came down to 5 percent last year due to a combination of global factors and domestic constraints. We cannot do much about the global economy. But we have reacted with determination to overcome domestic constraints on eco growth."
India's economy grew 4.5 percent in the December quarter, and most analysts predict a marginal uptick in the fourth quarter, at around 4.8 percent.
Nomura believes fourth quarter GDP growth will remain subdued at 4.5 percent due to the pullback in government spending, weaker consumer demand and subdued investment.
Credit Suisse agrees that investment has been subdued, but is sticking to a 4.8 percent growth number.
JPMorgan's note to its clients pegs fourth quarter growth at 4.9 percent against 4.5 percent in the previous quarter, largely on the back of a recovery in services. It says this will bring growth for the full fiscal year to 5 percent, down from 6.2 percent in FY12.
StanChart expects fourth-quarter GDP growth at 5 percent, primarily because of a lower base a year ago. It also expects some upward revision in recent quarterly GDP releases, pushing the full-year GDP for FY13 to 5.2 percent.
Economists at Barclays estimate growth will remain weak in the fourth quarter, at around 4.9 percent. This points to a full-year GDP growth of 5 percent.
This sub-5 percent prediction increases the pressure on the RBI to give growth a boost through another round of rate cuts, especially with inflation coming in below its target of 5 percent in April. And this scenario leads to some tempered optimism for FY14.
Sonal Varma of Nomura India says "Our expectation for FY14 growth is about 5.6 percent, its much better than FY13, its not as optimistic as some concensus expectation is about 6 percent. So we are not expecting a gung ho recovery, delta going forward should be positive."
And Credit Suisse agrees. It says it is "hopeful that the lower interest rate environment and improving investment should result in better growth numbers from the June quarter."
However, Barclays says: "We think economic momentum will remain weak in the near future."
CLSA India, which believes economic growth is bottoming, cautions that the pick-up will be gradual and uneven. Also, any meaningful recovery will be possible only after the general elections in 2014.
Now, with the prime minister admitting that crucial reforms like GST will move forward only after the elections, his 8 percent growth target may be the stuff dreams are made of.