Economic growth this fiscal is unlikely to exceed the 5.5 to 6 per cent level, says a leading Indian rating agency.
"Given the adverse external conditions, a policy environment that remains excessively cluttered and discouraging of enterprise, an otherwise fully engaged administration and a 60 million tonne mountain of grains, it is difficult to see how economic growth will exceed the 5.5 to 6 per cent level," says the Money and Finance bulletin of Investment Credit Rating Agency (ICRA).
"There is not much to commend on the policy front. Having held up critical reforms of economic activities in the state sector and postponed fiscal consolidation, domestic policy appears to have been reduced to fire-fighting," the bulletin says.
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"Under these elements, there are no growth elements left -- internal or external -- expect for that produced by the exertions of the millions of individual households in the country," it adds.
On a quarter-to-quarter basis, the first quarter is likely to register a 3.5 to four per cent growth. Some improvements may possibly materialise in the second quarter from better summer harvests and some recovery in construction and durable consumer product sales, it says.
Further improvement in the third quarter and a strong growth in the last quarter, mostly due to the low-base effect, is likely to pull the full year growth to 5.5 to six per cent.
This is likely to happen in the background of recovery in the USA, which is likely to thus reinforce positive sentiments on a number of counts, increase business confidence and feed itself back to stronger economic activity.
Thus, the probability of seeing a better 2002-03 is high, unless governance failures exact an excessive cost.
On agriculture, the bulletin says that a three per cent GDP growth in agriculture is likely, although a higher growth is possible.
The soft price regime for most agricultural products may turn softer with bumper harvests, coupled with low world prices, negating to an extent the impact of any volume growth on disposable income in the hands of growers.
While merchandise exports are not expected to go up significantly, the diversification of the export market to the "non-traditional" areas is likely to dampen the slack in demand in the traditional markets of the West.
Agricultural exports, especially of wheat are expected to grow rather strongly during the year, while exports of metals, chemicals, textiles and leather items are not likely to grow.