Indian economy to grow 7.4-7.6% this fiscal: ICRA

By PTI
02 July, 2015

A better-than-expected monsoon and sowing turnout in June have raised hopes of further rate cut by the Reserve Bank, which is likely to help economy grow at 7.4-7.6 per cent in FY16, ratings agency ICRA said today.

“In ICRA’s view, the better-than-expected monsoon and sowing turnout in June 2015 have increased the probability of a repo rate cut during the third quarter of 2015-16, as long as external developments do not result in excessive forex volatility,” ICRA said in a statement.

Following bouts of rainfall during pre-monsoon period, the surplus monsoon rainfall in June has encouraged early sowing of crops and quelled fears that had arisen when the India Meteorological Department forecast a deficient monsoon for 2015, it said.

As of June 26, the area sown under kharif crops was 23 per cent larger than the year-ago period.

“Nevertheless, only around one-fourth of the total area covered under kharif planting in 2014 was sown by the end of June 2015. Accordingly, rainfall dynamics in the remainder of the monsoon season would continue to impact the sowing pattern and eventual crop yields,” said Aditi Nayar, Senior Economist at ICRA Ltd.

Taking into account the drag related to the weak rabi harvest in the first quarter of 2015-16, as well as lingering uncertainty regarding the ultimate turnout of the kharif harvest, ICRA expects the agricultural sector to record a marginal growth in 2015-16.

An improvement in rural sentiments and consumption activity unlikely to set in until second half of 2015-16.

However, the recent improvement in growth recorded by the Index of Industrial Production, core sector industries, and various services sector indicators related to air traffic and cargo handled at ports are encouraging, said the ratings firm.

“Such factors would support a mild uptick in Indian GDP growth to 7.4-7.6 per cent in 2015-16 from 7.3 per cent in 2014-15,” it said.

It said would keep the food inflation in check in the near term with modest rise in support prices for various crops and a favourable base effect in some month.

“ICRA expects CPI inflation to print in a range of 4-6 per cent over the remainder of 2015, and average CPI inflation to decline below 5.5 per cent in 2015 from 6.6 per cent in 2014, assuming that crude oil prices remain relatively stable around current levels.” 

It also said that the ongoing Greece crisis and rate hikes by the US Federal Reserve may impact foreign exchange rates, however, the Indian rupee may only have limited vulnerability within the set of emerging market currencies.


Leave Your Comment
Worst impact of poor monsoon likely to be in west India: Govt

Worst impact of poor monsoon likely to be in west India: Govt

PTI 3 years ago
The worst impact of a sub-normal monsoon is likely to be in western India, with possible drought-like conditions in some areas, Agriculture Minister Radha Mohan...
​IMD predicts below normal monsoon in 2015, inflation may rise

​IMD predicts below normal monsoon in 2015, inflation may rise

Ishaan Gera 2 years ago
The Indian Meteorological Department in its first forecast for 2015 on Wednesday said that rainfall in the monsoon season running from June to September is...
Monsoon likely to remain weak during Aug-Sept: IMD

Monsoon likely to remain weak during Aug-Sept: IMD

Ishaan Gera 2 years ago
India is expected to see a lower rainfall in the last two months of the monsoon season, according to a press release by India Meteorological...
No Comments

Indian economy to grow 7.4-7.6% this fiscal: ICRA

Powered by WordPress.com VIP