ICRA expects mild uptick to 7.4% in GDP
Mumbai, Nov 28, 2015, DHNS:
Leading rating agency ICRA expects GDP growth to record a mild uptick to 7.4 per cent in 2015-16 from 7.3 per cent in 2014-15, and growth of gross value added (GVA) at basic prices would remain steady at 7.2 per cent in 2015-16.
Higher government capital spending, as well as efforts to facilitate clearances and simplify approvals have contributed to a pickup in investment activity, although the recovery is yet to widen beyond select sectors, says ICRA in the report.
According to ICRA, moderation in inflation, upward revision in minimum wages and transmission of monetary easing are expected to buffer urban consumption demand in the ongoing fiscal. However, the uncertain outlook for rabi crops is likely to draw out the prevailing weakness in rural sentiments.
Mixed trends in domestic consumption, availability of cheaper imports and continuing contraction of merchandise exports would prevent a sizeable improvement in capacity utilisation in the current year. Moreover, high leverage levels of various Corporate groups and weak asset quality of the banking system continue to constrain the pace of the economic recovery.
In ICRA’s view, the revision in salaries and pensions of Central Government employees post the implementation of the recommendations of the Seventh Central Pay Commission (SCPC) would spur demand in the coming fiscal.
Assuming that the revision is rolled out as scheduled and there are no lumpsum arrears that need to be released, ICRA expects the lower ticket sized consumer durable segment to receive a spending boost, from new as well as replacement demand.
Higher government capital spending, as well as efforts to facilitate clearances and simplify approvals have contributed to a pickup in investment activity, although the recovery is yet to widen beyond select sectors, says ICRA in the report.
According to ICRA, moderation in inflation, upward revision in minimum wages and transmission of monetary easing are expected to buffer urban consumption demand in the ongoing fiscal. However, the uncertain outlook for rabi crops is likely to draw out the prevailing weakness in rural sentiments.
Mixed trends in domestic consumption, availability of cheaper imports and continuing contraction of merchandise exports would prevent a sizeable improvement in capacity utilisation in the current year. Moreover, high leverage levels of various Corporate groups and weak asset quality of the banking system continue to constrain the pace of the economic recovery.
In ICRA’s view, the revision in salaries and pensions of Central Government employees post the implementation of the recommendations of the Seventh Central Pay Commission (SCPC) would spur demand in the coming fiscal.
Assuming that the revision is rolled out as scheduled and there are no lumpsum arrears that need to be released, ICRA expects the lower ticket sized consumer durable segment to receive a spending boost, from new as well as replacement demand.
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