Crisil sees economy growing at 6.5 pc in next 5 years

Tags: Economy
Rating agency Crisil has said a stable government post-elections is likely to help the country grow at an average of 6.5 per cent for the next five years.

"Our base-case forecast of an average GDP growth of 6.5 per cent between FY15 and FY19 is premised on a decisive mandate in the upcoming general elections," the rating agency majority-owned by Standard & Poor's said in a report.

The International Monetary Fund has predicted global growth for the calendar years 2014-18 at 4 per cent. However, Crisil said it is not the election results which impact the economy, except in improving sentiment, but policies formulated by the new government that will boost growth.

Economic growth eased to 4.6 per cent in the first three quarters of FY14 after clocking 9.3 per cent in FY12 and the just-concluded financial year may log the lowest growth rate in decades.

Crisil believes a decisive mandate will create an environment for speedy resolution of policy bottlenecks, hasten reforms and crank up investment efficiency.

"An improvement in investment efficiency, which has fallen drastically over the last two years, is expected to kick in with faster project clearances, implementation of stalled infrastructure projects and resumption of mining activities," the rating agency said.

This will support investment growth when both domestic and global demand begins to rebound and improve capacity utilisation, thus laying the foundation for the country's entry into a phase of healthier growth, the report said.

Crisil said achieving an average growth of 6.5 per cent over the next five fiscals is not enough for a country with 269 million people living below the poverty line, which needs to provide jobs to its exploding labour force.

"By not doing enough to accelerate growth, and thus job creation, the country risks setting off a vicious cycle of lower household income, consumption and investment spending that would be so much harder to shake off -- not to mention the utter loss of the demographic dividend," the report said.

According to Crisil, the task before the new government is clear -- the focus has to be on improving the efficiency of the economy by de-bottlenecking it.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • The NDA government would do well to keep its economic focus in place

    It is as if the worst horrors conjured by liberal secularists about India’s prime minister could be finally coming true.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Urs Schöttli

Shifting sands in the Far East

As was to be expected, Japanese prime minister Shinzo Abe ...

Zehra Naqvi

When humanity died, bestiality prevailed

The terrorist attack that killed 132 children in Peshawar has ...

Bubbles Sabharwal

Why self-esteem must be your best friend forever

Two negatives do make a positive! Imagine no doubts, no ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture