 "GDP to grow by 6%: Ficci")
The respondents indicated inflation would remain favourable as price levels were expected to remain subdued, although currency volatility could have an adverse impact. The survey indicated that passive industrial performance, elevated current account deficit and a depreciating rupee might dampen growth prospects if adequate supportive action was not taken.
Last week, Finance Minister P Chidambaram, too, had said India would see a growth of six per cent during the current financial year.
More From This Section
The rupee-dollar exchange rate is expected to touch 56 by the end of March 2014. Economists were of the view that the Reserve Bank of India's intervention measures should check rupee volatility to some extent. On the possibility of issuance of sovereign bonds, participant economists mentioned the need for deliberation on the time period and the rate of these bonds.
The performance of the industrial sector is expected to see some uptick as respondents expect the Index of Industrial Production to grow at a moderately faster pace of 3.3 per cent in FY14 against 1.1 per cent growth last year.
The survey indicates a cut in the key policy rate would be crucial to get growth back on track. A majority of the participating economists anticipated a 50-75 basis points cut in the repo rate by the end of this financial year, at 6.50-6.75 per cent.
The participants said a fall in the repo rate will give room for banks to reduce deposits, as well as lending rates. It was pointed out that although 125 bps worth of rate cuts had taken place since April 2012, lending rates have not come down commensurately.
On the current account deficit (CAD), it was reported that the depreciating rupee would add to the burden and even out steps taken by the government to curb gold import demand.
The CAD-to-GDP ratio would remain above the comfort zone, although it is likely to be slightly better than the last financial year's figure, 4.8 per cent.
For the first quarter of FY14, CAD-to-GDP ratio is projected at five per cent, which is likely to temper in the second half of the financial year. The estimated figure for FY14 is 4.5 per cent. Financing CAD will be the real challenge this year as global liquidity would be under pressure.
On the other hand, a majority cited that the proposed food security Bill could impose an additional pressure on the fiscal situation and would make fiscal sustainability plan of the country difficult to achieve. As a result, the expected fiscal deficit to GDP ratio is five per cent for 2013-14, which is slightly above the budgeted 4.8 per cent.