New Delhi: The overall gross domestic product (GDP) growth at 2004-05 constant prices would touch 5.4 per cent in the second quarter (July-September) owing to a good monsoon and resultant better performance of farm sector thereby propelling the industry and services performance in the current fiscal, apex industry body ASSOCHAM projected today.
“Slew of policy measures initiated by the Reserve Bank of India (RBI) and the Centre in the recent past are helping recovery of lost business confidence and the business cycle is also looking towards improvement,” according to a paper titled ‘ASSOCHAM Projections – India’s Growth Performance in 2013-14: Q2.’
While the agriculture sector is likely to grow by 4.25 per cent, industry and services sectors are likely to register three per cent and seven per cent growth respectively in the second quarter of 2013-14 fiscal, according to the paper prepared by the ASSOCHAM Economic Research Bureau (AERB).
“Present contraction in expenditure and slump in demand would significantly be repaired by the impetus generated from the farm sector,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber’s paper.
“Poor performance of goods and services exports in face of tepid global recovery would get addressed by on-going recovery process in India’s export markets and after taking into account all the aforementioned factors the economy is likely to register higher growth in this fiscal,” said Mr Rawat.
Considering that 74 per cent of total 622 districts received either excess or normal rainfall in the monsoon season this year, the area sown under kharif crops taken together has been reported at 1,033.6 lakh hectares across India as against 979 lakh hectares during the corresponding period last year.
“This development is likely to boost the growth chances immensely in the current financial year, besides, the expected growth in agriculture production is also likely to drive industrial growth and consequently have a positive impact on services,” the ASSOCHAM paper further noted. “An increase in agricultural production also puts more money in the pockets of farmers who spend it on goods such as tractors and agricultural implements, apart from consumer goods.”
On the industrial front, the paper highlighted that as per the current corporate scenario, the investment activity in top twenty states across India accounts for 56 percent of the total live investments which has been gradually growing from over 46 per cent as of March 2009, thereby indicating increase in new capacity creations.
“Besides, the Cabinet Committee on Investment clearing a number of long pending high worth projects and the postponement of fiscal taper by the US Fed have also helped investments,” added the ASSOCHAM paper. “Recovery of developed countries has also led to increase in export demand in recent months.”
The growth in incomes generated from primary and secondary sectors gives rise to growth of services sector as substantial portion of services such as transport, and communications are intermediates and derive their demand from industry and agriculture.
Revived export demand has also led to improved performance of strategic business services like IT (information technology) and ITeS (information technology enabled services) that are mostly export driven, the paper added.
Highlighting the recovery in global economy, the ASSOCHAM paper said, “The international growth confidence has been partially restored as Eurozone countries started showing indications of recovery after the concerns of escalation of Eurozone crisis dissipated in 2012 and as a result, the US economy also witnessed improvement.”