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Growth with hiccups

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  26 April 2015 12:00 AM GMT

The latest outlook for India on the economic front is encouraging, though some economists warn of distant thunder. The country’s growth rate is expected to clock margilly higher at 7.5 per cent this year compared to 7.2 per cent in 2014, as per global rating agency Moody’s projections. This tallies with the IMF’s latest outlook on India, expecting it to outstrip Chi with 7.5 per cent growth in both the current and next years. The World Bank too sees India on the fast track to growth with a 12 per cent rise in investment in 2015-17. Certainly the collapse in intertiol crude oil prices by more than half since last year is giving India more room to manoeuvre. Inflation was down to 5.17 per cent last month, much within the Reserve Bank’s target of 6 per cent. Market alysts are expecting the RBI to further ease policy and go for a third interest rate cut this year itself to boost private sector spending. However, despite the relatively smooth sailing, there are some worrying signs. Unseasol rains has hurt farm output recently, aggravating agricultural distress and putting farmers’ problems back onto centre-stage. The land bill issue is bringing the Opposition together, leaving the treasury benches to battle some negative perception. Whether it will make the rendra Modi government press on the reforms accelerator or cautiously go slow, remains to be seen. Foreign investment has also been weak due to continuing red tape and some regressive tax measures. With company earnings declining in January-March 2015 quarter, share market indicators too are down presently. All this is making the Modi government focus more on public-private partnerships, while moving ahead strongly with its plans to raise Rs 70,000 crore this fiscal by divesting government shares in PSUs.

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