With growth bottoming out in the current fiscal, experts are not very optimistic about the country’s economic picture changing significantly in 2014-15 even if a new government comes to power after the general elections starting next month. “My qualitative prediction do emerge from my assessment we got to address the structural bottlenecks. They will not bear fruits immediately but they will create momentum which will lay the foundation for more rapid growth,” said former RBI Deputy Governor Subir Gokarn.
“So next year, I don’t see the very significantly different from the current situation on any other front, (growth, CPI and IIP) except that of balance of payment to be little more comfortable than the last year” he said.
Gokarn, currently Head of Director of Research Brookings India, said food inflation has been there over 10 per cent for last six years.
“If we have food inflation over 10 per cent year on year, monetary policy essentially is constrained. Its ability to stimulate (growth) is limited. Whatever the position may be, the force, driver is going to play a limited role in reviving growth,” he said.
Echoing similar views J M Financial Chairman Nimesh Kampani said the growth in the next fiscal would not be significantly different from 2013-14.
However, he said, “it can go up to 6.5-7 per cent in 2015-16 provided right kind of government comes in, right policy decision are taken and centre state relationship improves.”
Painting an optimistic picture Surjit Bhalla Oxus Investments said that he expects GDP growth of about 7 per cent in the next fiscal.
Consumer Price Inflation is expected to be around 6 per cent, Index of Industrial production between 5-6 per cent, while GDP over 7 per cent in the next fiscal, Bhalla said.
“There are a lot of low hanging fruits — tax reforms. I think first two years would be a nice bounce back after stable government. Thereafter, we need reforms,” Bhalla added.
Talking about rupee Gokarn said it has responded to narrowing of current account deficit and the correction got sharper than what was expected.
Rupee has been strengthening against dollar in the past few days following inflow of foreign currency.
Gokarn said rupee at 60 against US dollar provides some competitiveness to India’s exports and is also making imports a lot less competitive to producers.
“In the short term, rupee stability , I think, a huge factor, in the current capital inflow that you referred to but I don’t think it can be taken for granted.
It is not something that is going to remain in place. Unless we start addressing structural issues,” he said.