Way lower than 9% annual growth rate achieved in 2010-11, Rating agency Crisil has forecasted a stable government post-elections to help economy grow at an average of 6.5 percent for the next five years. However, this growth rate is strictly based on the premise of decisive mandate in the general elections 2014-15.
It further elucidated that it is not the election results which impact the economy, but policies formulated by the new government that will boost growth. The analytical firm Crisil opined that a decisive mandate would create an environment for speedy resolution of policy bottle-necks, hasten reforms and jump start investment efficiency, which has fallen drastically over the last two years.
Credit rating and research firm is of the view that an improvement in investment efficiency, which is expected to kick in with faster project clearances, implementation of stalled infrastructure projects and resumption of mining activities, will shore up investment growth when both domestic and global demand begin to rebound and improve capacity utilization, thus laying out the groundwork for the country's doorway into a phase of healthier growth.
Crisil, however, pointed out that evolving investment dynamics, illustrate that neither a surge in investments nor improvement in efficiency witnessed during fiscals 2004-2011, which led to near 9 percent GDP growth, would recur in the next five years.
Nonetheless, the rating agency underscored that achieving an average growth of 6.5 percent over the next five fiscals was inadequate for a country with over 269 million BPL populations as this would not do enough to accelerate growth, and thus job creation, setting off a vicious cycle of lower household income, consumption and investment spending that would be so much harder to shake off. It further warned that in absence of proper solution for pressing policy and implementation issues, average growth rate of 6.5% would be unsustainable.
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Tuesday, 22 April 2014
Stable govt post-elections to help India grow 6.5% in next 5 years: Crisil
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