Mumbai: Global brokerage Nomura on Tuesday pegged the economic growth at one of the lowest at 5.6 percent next fiscal, saying there is no recovery in sight on the non- agricultural component of the economy.
"We are currently pencilling in a pick-up in growth from Q4 of FY13 aided by better global demand and a pick-up in government spending ahead of elections...We remain comfortable with our below consensus GDP growth forecast of 5.6 percent in FY14," its economists said in a note.
The report said the non-agriculture growth fell to 5.2 percent in the December quarter, down from 5.8 percent in the preceding quarter and is unlikely to recover.
"Activity data have been mixed with a rebound in January industrial output, but disappointing auto sales in February. Our composite leading index for the country, which has a two-quarter lead over the non-agriculture GDP, points to a prolonged bottoming-out, rather than a recovery," it said.
However, the report said this is not surprising as economic momentum has decelerated sharply at a time of weak external demand and limited space for monetary or fiscal stimulus.
Nomura added that the reforms undertaken in the recent past will have a "meaningful impact only after a lag".
According to the government estimate, GDP will grow by a decade low of 5 percent in this fiscal, while the budget presented by Finance Minister P Chidambaram has targeted a GDP reading of 6.1-6.7 percent for FY14.