The economy would grow by 5.2-5.5 per cent in the current fiscal driven largely by a new government which is expected to focus on growth, Care Ratings said today.
"It is expected the economy in general will improve in FY15, albeit gradually on the premise that a strong government would be in place after the elections which will reduce uncertainty in business environment and focus on reviving growth," the rating agency said in a note.
During the just-ended fiscal, official estimates say the GDP growth will come at around 4.9 per cent, which will be a higher than the 4.5 per cent achieved in FY13.
Care Ratings expects the new government to be more responsible on the fiscal management front, and said that it expects the fiscal deficit to get contained to 4.1 per cent in FY15, an improvement from the 4.6 per cent in FY14.
The agency expects industrial growth to revive to the 2-3 per cent levels, after struggling for a better part of the just concluded, where it is expected to come at 0.2-0.3 percent levels.
On agriculture, where concerns have been raised due to a possible playing out of the El-Nino factor, the agency said it expects a rise of two per cent largely because of a higher base.
If the concerns around the El-Nino factor indeed come true, the growth may dip by 1 to 1.5 per cent, it said.
It said the average consumer price inflation will cool down to 7.5 per cent in FY15, with the impact on the food inflation due to any disturbances in the rainfall being the biggest risk.
A cool down will help the Reserve Bank, which is targeting to get inflation down to 8 per cent by next January, ease the repo rate at which it lends to the system to 7.5 per cent, the agency said.
On the external sector front, it expects exports to rise 8-9 per cent as the global economy becomes more stable and imports to go up by 11-12 per cent after the 8.3 per cent dip in FY14 driven by moves to curtail them.
This will result in a rise in the current account deficit, but it will still be under 3 per cent considered as manageable by policymakers, it said.
The exchange rate will be more stable in the 60-62 against the dollar band, it said, adding that the country's forex reserves will rise to USD 320 billion by March 2015 from the current USD 300 billion.
