India's growth to be below 6%, to pick up post polls

The country's gross domestic product growth will fall below the 6 per cent mark in FY13 and we may return to the high growth path of over 9 per cent only after the general elections in 2014, a survey of corporates by global bank Standard Chartered, said.

The survey, in which 125 corporate clients of the bank from south India participated, says a majority of corporates continue to be pessimistic about the country's growth with 72 per cent saying GDP growth will fall below 6 percent and 20 per cent predicting it to be less than 5 per cent.

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On the crucial question of revival in growth to the pre-2008 crisis levels of near 9 per cent, 86 per cent of the respondents said it will be before 2016 with a majority 80 per cent of them saying it will be between 2014 and 2016.

"They probably expect the 2014 general elections to effect a change in the political scenario that will be more conducive to economic growth," the bank said.

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There has been a rash among analysts and think-tanks in cutting GDP growth estimates following the release of official data in May which indicated quarterly growth had fallen to a nine-year low during the last quarter of FY12, while the growth for the entire fiscal at 6.5 per cent was lower than the one observed during the peak of the post-Lehman credit crisis of 2008.

Japanese bank Nomura was the last one to cut its forecast, when it revised down its growth estimate to 5.5 per cent last week, citing deadlock in fiscal and monetary policy.

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The government is targeting a GDP growth of 7.6 per cent for the fiscal while Standard Chartered's in-house economists have pegged it at 6.2 per cent.

The slowdown in growth is being attributed to a variety of factors including the weak external trade situation which has widened our current account deficit to record lows, the depreciation in rupee, and domestic issues like a 'policy paralysis' and the elevated interest rates of Reserve Bank of India, which is driving with the inflation number in mind.

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On expectations of a rate cut by the RBI, 66 per cent of the respondents thought rate cuts of up to 0.50 percent are in the offing.

With the rupee continuing to being volatile, 40 per cent of those surveyed felt it will slide below Rs 57 to the dollar by September, possibly touching new lows from the Rs 57.15, while 4 per cent said it will fall below Rs 60.