Economic growth may dip to 6.4%: Icra

Rating agency Icra has warned economic growth may dip to 6.4 per cent during 2004-05, hinting that the "feel-good factor" will be temporary and over 8 per cent growth unsustainable.

However, it said GDP growth could rise to 7-7.5 per cent in subsequent years if the new government adopted good policies and implemented them efficiently.

"It is sorely tempting for the government to seize upon the good news of 2003-04 and try to argue that 8 per cent growth is sustainable and that India now stands on this trajectory. But that is patently far from being the case," Icra said in its report 'Money & Finance' to be released soon.

Assuming a good monsoon this year along with robust growth in the industry and services sectors, Icra said, "Even then, we still will not get GDP growth in excess of 6.4 per cent." "This is the combined impact of 1.7 per cent growth in agriculture and 7.8 per cent in non-agriculture (industry and services sectors)," Icra said.

The rating agency expects manufacturing to grow by 7 per cent and construction activities by 9 per cent, while services will post over 8 per cent growth in 2004-05.

"If good policies are adopted by the new government and efficiently implemented, it is possible in a few years that the underlying achievable growth in non-agriculture sectors may be pushed up beyond 8-8.5 per cent," Icra said.

Given that agriculture is unlikely to grow in excess of 2 per cent, the result would be an overall economic growth of a little over 7 per cent, it added.