Finance Ministry pegs GDP growth at 5.5% in FY2014 - Angel Broking

In its quarterly review of the economy, the Finance Ministry has pegged the GDP growth in the economy at 5.5% in FY2014. It expects growth to pick up from the second quarter against the 4.4% in 1QFY2013. But it does note that current macro trends indicate that a combination of global and domestic developments is likely to result in a shallow ‘U’ shaped recovery. The estimated growth is higher than market expectations in the range of 4.5-5% and our estimate of 4.8%.

On inflation, it estimates that based on current trends and the wearing of the base effect post October, WPI inflation is expected to be in the range of 6.5-7.2% at the end of FY2014. The RBI is also expected to revise its inflation forecast upwards from the initial 5% projection by end March 2014 in order to reflect inflationary pressures from the supply side and impact of INR depreciation.

The FinMin maintained its stance on containing fiscal deficit to the budgeted 4.8% of GDP. At the same time, it noted that performance of the Central Government in the first quarter of the current fiscal may not sound optimistic, but, overshooting of government expenditure and underperformance of revenue receipts in the first quarter is a reflection of the current macroeconomic environment and as per the trends in the first quarter for most of the previous years.

Source : Equity Bulls

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