This Article is From Jul 09, 2014

Economic Survey's Growth Estimate Reasonable: Analysts


India's economy is expected to grow by up to 5.9 per cent in the current fiscal year, the new government of Prime Minister Narendra Modi said in a report on Wednesday that called for fiscal consolidation to bring down inflation.

The economic survey comes a day before Finance Minister Arun Jaitley delivers his maiden budget.

Below are some analyst views about the report.

R. Sivakumar, head of fixed income, Axis Asset Management, Mumbai

"I think it's reasonable (regarding the GDP growth estimate). There is some evidence of an industrial growth pickup, so I don't think they are too far off the estimates.

Over the last few years we have seen the quality of expenditure deteriorate, i.e. higher amount of subsidies and lower amount of capex and planned expenditure, as well as the tax-to-GDP ratio stagnate. We will have to wait until tomorrow to see what actions are taken on these steps.

They are talking about removing or amending laws, which allow government interference of markets. These clearly reflect the new government's pro-business outlook.

From the budget what we expect to see is something where they adhere to some form of discipline, not make more announcements which they cannot achieve."

A. Prasanna, economist, ICICI Securities Primary Dealership, Mumbai

"It's definitely reassuring to know that the finance ministry and RBI are on the same page when it comes to inflation. They are speaking in one voice about the need for inflation (CPI) targeting as a key to promoting growth of the economy,"

Rupa Rege Nitsure, chief economist, Bank of Baroda, Mumbai

"It is a highly realistic survey in its assessment of economic stresses and fiscal challenges. Given the unique political setting of stability that India enjoys today, it is highly probable that many of its recommendations will actually get implemented in the budget tomorrow."

Nirakar Pradhan, chief investment officer, Future Generali India Life Insurance, Mumbai

"The focus on fiscal consolidation and inflation shows the government's focus on the two main risks for the Indian economy.

"Going forward, if monsoon behaves, there will be nothing to worry about. 2014/15 GDP growth pegged between 5.4 to 5.9 per cent is good, as it shows we will break the trend of sub-5 per cent growth rate seen over the last 2 years. One should expect GDP growth to reach about 8 per cent in the next 2 years."

Copyright: Thomson Reuters 2014