Investment Information and Credit Rating Agency (Icra) has projected a growth rate of 5.5 per cent to 6 per cent for the current financial year.
In its bulletin for January-June 2001, the rating agency said there was very little growth left in the economy except for a better agricultural production.
It said there are good prospects in the agricultural sector because of large harvests due to crop recovery in Madhya Pradesh, Rajasthan and Gujarat moderated by losses in Karnataka and Rayalseema and Telengana areas of Andhra Pradesh.
However, the rating agency maintained that the harvests might not yield substantially higher disposable income and demand because of subdued price regime. It has attributed the lower price regime to the huge foodgrain stock in the country and also the declining world prices for the cash crops.
The rating agency said, "The soft price regime, coupled with low-world prices, for most agricultural products may turn softer with bumper harvests and will also negate the impact to the extent of any volume growth on disposable income in the hands of growers."
Icra said during the last financial year high export growth was major contributor to the economic growth, even though it formed less than 10 per cent of the country's gross domestic product. However, for this fiscal the rating agency has projected a much lower export growth.
It said, "In contrast to the 20 per cent increase in the balance of payments, exports from $37.5 billion in 1999-2000 to $44.9 billion in 2000-01, it is likely that the figure in 2001-02 will not exceed $47 billion."
The rating agency doesn't expect any initiatives from the policy makers to revive the economy. It says, "A series of scandals has ensured that the powers that be, will have their hands full, dealing with them, and several related parliamentary probes for the rest of the year."
