Inflation would continue to remain range bound during FY15 and moderate only towards the end of FY15 to average at around 5.8%
The performance of the Indian economy during FY14 in some sense has been weaker than what D&B had envisaged in April 2013. The constant change in the Indian and global economic landscape created uncertainty and risks to the growth momentum. Indian economy continued to languish recording a below 5.0% growth for the second consecutive year during 2013-14. D&B's report India Outlook 2014-15 is intended to facilitate more informed decisions by the businesses and also enable investors to assess the degree of business confidence and potential for India's economic growth. The report provides forecast of key macroeconomic variables, which will determine the course of the business environment over the next fiscal year.Even as a 7% growth may still be a few years down the road, D&B expects growth to recover, albeit moderately, in FY15 even as sluggish investment activity, unhealthy fiscal situation, and policy and administrative uncertainty on the part of the government will continue to place strain on economic activity during the first half. The second half of FY15 could bring in a more optimistic economic tone, as the impact of the policy measures taken and the project clearances unravel in due course of time.
Dr. Arun Singh, Senior Economist, Dun & Bradstreet India said, "The key pillars of this view are improved private consumption and a renewed pickup in investment activity towards second half of FY15. Improved policy environment, revival of large stalled projects cleared by the Cabinet Committee of Investments (CCI) along with some revival in demand conditions are expected to provide the impetus to growth. However, much of this economic change would be contingent on the installation of a stable government with a strong reform agenda. Assuming a normal monsoon and a stable Government at the Centre, D&B expects GDP to record an average growth of 5.5% during FY15 as against estimated 4.7% growth in FY14".
"Nonetheless, GDP growth rate would still remain considerably lower than the potential growth. However, if risk to agriculture output from the possible El Nino phenomena materializes, the forecast to the GDP would have to be revised downwards", he added.
D&B's Forecast - Key Highlights
* Assuming a normal monsoon and a stable Government at the Centre, D&B expects GDP to record an average growth of 5.5% during FY15 as against estimated 4.7% growth in FY14
Also Read
* The service sector is expected to grow by 7.3% in FY15 from an estimated 6.8% in FY14
* The industrial sector to grow by 2.8% in FY15 from an expected growth of 0.6% in FY14
* D&B expects Private Final Consumption Expenditure (PFCE) to grow at around 5.4% in FY15 from an expected moderate growth rate of 3.0% in FY14
* D&B expects the Index of Industrial Production (IIP) to register a moderate growth of 0.1% in FY14 and gather some pace during H2 FY15 and grow by 2.7% during FY15
* The expected economic revival during the second half of FY15 is likely to improve the savings rate to 30.8% in FY15 from an estimated 30.4% in FY14
* Investment rate is expected to moderate further to 32.4% in FY14 whereas in FY15 investment rate is likely to edge upwards to a level of 33.1%.
* Bank credit growth expected to improve from the low growth rate of 14.3% in FY14 to 16.5% towards end of FY15.
* D&B expects the 10-year G-sec yield to be around 8.3% by end of FY15 as compared to 8.8% during FY14
* Inflation would continue to remain range bound during FY15 and is likely to moderate only towards the end of FY15 to average at around 5.8% from an average of 5.9% during FY14
* The rupee is likely to appreciate during the second half of FY15 and stand at around Rs 59.50 per US Dollar by end of FY15.
Sectoral Outlook
Automobiles
* Domestic automobile sales to record moderate growth during FY15
* Competitive pressures to keep profit margins of automobile companies under pressure
* Export prospects remain challenging
Pharmaceuticals
* Indian Pharmaceutical industry focusing on niche products and emerging economies
* India with growing ageing population and low healthcare penetration will continue to be an attractive market
* Implementation of New Pricing Policy is likely to translate in weak domestic revenues
* Quality concerns could affect export performance
Real Estate
* Gradual revival in demand for residential real estate segment expected from the second half of FY15.
* The BFSI sector to drive demand for office space during FY15
* Domestic demand continues to be relatively healthier in hospitality segment
Metal
* Industry would focus more on higher utilization of existing capacity than investing in new projects during FY15
* Improvement in raw material availability likely to fuel production growth, albeit moderately
* Demand from end-user industries to drive growth in metal consumption
Textiles
* Extension of Technology Upgradation Funds (TUFs) Scheme: Critical for Textile development
* Technical Textiles segment to gain strength in the near future
* Powerloom production is almost expected to be flat in FY14 and increase by more than 10% in FY15
Banking
* Non-Performing Assets (NPA) would continue to remain a key concern area
* Competition in the banking sector to intensify with the entry of new banks
* Indian banks continue to focus on financial inclusion to enhance their geographic reach
Insurance
* Digitization in insurance to play a key role
* Customer Centricity - will be a key focus area during FY15
* Life insurance sector likely to witness double digit positive growth in first year premium income in FY15
IT - Business Process Management
* Big data analytics represents huge growth opportunities
* Healthcare offers tremendous growth potential for Indian IT vendors
* SMAC (Social, Mobile, Analytics and Cloud) based technology platform is expected to fuel growth of the IT and ITeS industry
* Future growth to be driven by verticals of energy efficiency and sustainable energy
Telecom
* Focus on subscriber quality as well as rural markets to strengthen
* Data service to emerge as the next growth driver in Indian telecom sector
* Rising popularity of chat apps and social media applications to pose a risk to revenue growth
* Likelihoods of much needed consolidation happening in the coming year is slim as new M&A policy fails to stimulate the sector
Retail
* Easy financing scheme & innovative marketing strategy to boost growth
* Rising interest rate & increasing rental cost are likely to pressurize the profit margins of the industry
* E-tailing to observe an exponential growth over the next few years on the back of growing internet penetration
Powered by Capital Market - Live News