GDP growth expected to be 5.7% the central bank said it expects the economy to grow at 5.7% in FY14. However, the Government’s projection of economic growth is at 6.1-6.7% for FY14. Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the RBI’s projection of 5.7% was more “pessimistic”. Now, the big question is whether the Indian economy would be able to deliver what it has promised. In the past, we have witnessed the GDP growth getting downgraded every quarter. In the last two years, the Indian government’s initial forecast for full year has never been accurate.
The GDP growth fell from 5.5% in Q1FY13 to 5.3% in Q2 to 4.5% in Q3. After a negative growth in November & December, the IIP numbers for January gave indication of some recovery with the growth rate inching up to 2.4%, against 1% in the corresponding month a year ago. However, in February, the IIP growth was slow at 0.65%. Hence it is tough to say whether the GDP growth has bottomed out and the recovery is on the cards. IIP & GDP growth over the next one to two quarters, could give us more clarity on where the economy is headed.