MUMBAI: The Indian economy is expected to bottom out towards end of the calender year, led by recovery in private investments and exports, a report has said.
"We expect India to bottom out near the end of the calender year. The key drivers are exports, softer lending rates, an additional fiscal stimulus and a recovery in private investments," Bank of America-Merrill Lynch Research said in its economic analysis here.
The recovery should be led by a turn in consumption cycle. Good harvests and a hike in Government employees' salaries (the 6th Pay panel recommendations) are already buffering the consumer from the global recession as evidenced by strong sales of passenger cars and two-wheelers, it said.
Aggressive auto and home loan rate cuts by Government- owned banks should also help revive urban consumer demand, and a recovery in demand should reduce job uncertainty in the financial, software, and export sectors, the report said.
The bulk of the quarter-million Indian jobs lost during the Sept 2008-March 2009 period were in these sectors.
On the investment side, the mix of softer lending rates and a reopening of external sources of project finance - external commercial borrowings and foreign investment in equity offerings - should help revive investment projects that are being postponed due to financing difficulties, the report noted.
Source : The Economic Times