India is expected to grow at a higher rate of 6.7 per cent in 2013-14 on the back of a pick-up in the agriculture sector, lower interest rates and higher government spending, according to ratings agency Crisil.
The Indian economy will grow at an estimated 5.5 per cent this fiscal.
“India’s GDP growth in 2013-14 will be supported by the revival of private sector consumption growth, aided by higher growth in agriculture,” said Roopa Kudva, Managing Director and CEO, Crisil.
According to the report, a normal monsoon would boost agricultural GDP growth to an above-trend rate of 3.5 per cent in 2013-14, also gaining from a lower base of 2012-13.
In addition to increased growth, the agency has also predicted a reduction in wholesale price inflation (WPI), despite higher consumption growth, to around 7 per cent from the current 7.7 per cent projected for 2012-13. “The major factors pointing towards lower WPI are improved agricultural output, a stronger rupee and lower crude oil prices. However the likely upward revision of fuel prices and persistent excess demand for food articles are likely to limit the further decline in WPI inflation,” the report said.
With easing of inflation, the agency expects the Reserve Bank of India to cut interest rates by 75-100 basis points this month, thereby lowering retail lending rates and boosting demand in interest-sensitive sectors.
“Further, improved external demand, as a result of global growth, could raise India’s exports especially in the IT/ITes sector. We therefore expect the services sector to remain healthy at 8 per cent in the next fiscal,” Crisil said.