HSBC pegs FY14 GDP at 6.9% on reform push, investment pick up

Mumbai: HSBC today said the Indian economy, which is projected to grow at 5.7 percent this fiscal, is likely to clip at a faster pace next fiscal at 6.9 percent following the recent spate of policy reforms.

“We expect, the economy to grow at 5.7 percent this fiscal and 6.9 percent in the next financial year,” HSBC India and Asean chief economist Leif Eskesen told reporters here. The FY'13 growth forecast is a bit higher than government’s own growth assumptions, and way ahead of many of its own peers, which all have pegged growth this year falling to around 5 percent.

The IMF had recently pegged the growth this calendar year at a poor 4.9 percent, while Finance Minister P Chidambaram early this week had said growth would hit a decadal low of 5.5 percent this fiscal.

Basing his optimism for higher growth next fiscal, he said policy reforms, traction in infrastructure projects and rise in investment would be the key factors driving growth next fiscal.

“We see early signs of reforms, which is likely to improve the investment climate. Also, some traction in infrastructure projects is expected. Further, some stabilisation in global factors will also help growth next fiscal,” Eskesen said.

Talking about inflation scenario, he said inflation is likely to go up in the near-term after which it is likely to moderate.

Wholesale price index based inflation stood at 7.81 percent for September, much above the comfort level of the central bank, which held back a much-sought after policy easing last month-end.

Talking about the way ahead for the economy, Eskesen said structural reforms along with loosening of monetary policy would support future growth.

PTI