| Date: |
28-11-2015 |
| Subject: |
ICRA expects mild uptick in economy at 7.4% in 2015-16 |
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MUMBAI: Ratings firm Icra expects GDP growth to record a mild uptick to 7.4% in 2015-16 from 7.3% in 2014-15, and growth of GVA (gross value added) at basic prices would remain steady at 7.2% 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, the ratings firm said in a 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 sizable improvement in capacity utilisation in the current year.
Growth of GVA at basic prices is estimated to have improved to 7.3% in Q2FY16 from 7.1% in Q1FY16 on a year-on-year (y-o-y) basis, led by a pickup in the pace of growth of industrial output, execution in some infrastructure sectors, Government spending and services exports. ICRA expects the expansion in industry (to ~6.8% from 6.5%) and the services sector (to ~9.0% from 8.9%) to have risen in Q2FY16 relative to the previous quarter.
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 lump sum 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.
Source : economictimes.indiatimes.com
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