See FY15 growth at 5.5%; downside risks in Q2: Deutsche Bk

Below is the transcript of Taimur Baig's interview with Latha Venkatesh and Ekta Batra of CNBC-TV18.

Latha: As you and many economists were telling us 5.7 was par for the course because many of you economists predicated it. What were the key takeaways of the numbers that you consider positive? Are you at all upgrading any of your year end numbers?

A: The improvement was fairly across the board. You have to say that it is not just mining and manufacturing and car production which was the biggest early indicator that we are going to get a good quarter but if you look at what is happening on the financial services industry, what is happening with construction and even beyond that with respect to tourist arrival and hotel occupancy there is a broad based upward momentum. So, it is not just standing on one leg and that makes us feel a bit better about the quality of the pick up as oppose to if it was just driven by one major factor.

However, it doesn't compel us to change our forecast. We are looking at 5.5 for the whole year and we would need to see substantial upward momentum in a variety of things before we upgrade our forecast. As you know we maybe off to a good start with Q1 of this fiscal year but Q2 will probably be already subject to some downside risk given the way monsoon has panned out and the power shortage issue which probably will be a drag on power production.

Ekta: Within this 5.5 percent that you do have what is your breakup with agri, services as well as industries?

A: On agri it is hard to be very constructive. So, one is looking at for the whole year about 3-3.5 percent. So, the burden would fall on the services side and which again whether it is the way the public sector spends money or the way the financial services industry expands, everywhere we have to see high single digit growth rate. We balance that out and get that 5.5 percent growth. On the manufacturing side, mid 5 is what we are talking about. So, low single digits for agri, mid single digit for industrials and then high single digit for services.

Ekta: There is quite a momentous occasion that at least the economist community will be celebrating from the media side this week that will be Rajan’s one year that he completes on Thursday. So, we have been asking a lot of our economists to rate him on a scale of 1-10 and what you thought were his maybe biggest achievements and his biggest disappointments according to you in the last one year and if you could start with a rating on 1-10?

A: It will be high single digit, definitely something between 8 and 9 and that is speaking very highly; I probably will not give anybody in the world a 10 because there is always room for improvement but that is a fabulous start for Governor Rajan.

A year ago when he took office I wrote in Financial Times arguing that he brought in all the right credentials, the one credential that we didn’t know whether he had or not was whether he was lucky and he has definitely been lucky. You have lots of good generals but the lucky generals are the one that really triumph. Similarly, with Governor Rajan things have worked very nicely in his favour.

Had the taper tantrum continued through the fourth quarter of last year, India would have been in a far more difficult stage than it was right after the Governor’s arrival. However, since then whether it is the paper on inflation targeting or push towards financial inclusion or the sort of the work that he has done to hold policy tight on one side but make sure the liquidity was not a problem I think it has been a very good start to his tenure.