Polls to help economy grow by 6.4% this fiscal, says Goldman
Mumbai: Wall Street brokerage Goldman Sachs on Friday projected an 'above-consensus' growth of 6.4 percent for the current fiscal on factors like the upcoming general elections which, it said, will increase government spending, lower interest rates and lead to action on the policy front.
"We reiterate our above-consensus GDP growth forecast of 6.4 percent. The key to an improvement in activity is a pickup in the investment cycle," it said in a report.
It said higher government capex coupled with falling rates and policy reforms to ease bottlenecks and manufacturing export growth will drive investments during the ongoing fiscal.
Yesterday, the UN pegged the calender 2013 growth at 6.4 percent, while the ADB last projected that the domestic economy would reach 6 percent in the current fiscal.
In the budget, the government had pegged growth at between 6.1 and 6.7 percent. Rating agency Crisil had lowered its FY14 growth estimate to 6 percent from the earlier 6.4 percent earlier this week.
Official estimates suggest the economy might have expanded 5 percent in the recently concluded fiscal, the lowest in ten years.
"The year before the elections is generally associated with increased government spending. Indeed, government spending (as a percentage of GDP) has increased the year before the elections, in each of the last four general elections," it said.
While stating this also increased the possibility of a higher fiscal deficit, it called it a "positive stimulus to the economy."