HSBC sees India GDP growth at 6.2% in FY10, inflation at 8%

Last Updated: Thursday, November 5, 2009 - 18:26

Mumbai: Global banking major, HSBC has
retained its India GDP growth forecast of 6.2 per cent in FY10
but hiked the outlook for next fiscal by 0.5 per cent to 8.5
per cent given the economic recovery.

"We have decided to leave the FY10 GDP growth forecast
of 6.2 per cent unchanged. For 2010-11, the growth forecast
has been revised to 8.5 per cent as against the earlier
forecast of 8 per cent," HSBC Co-Head Asian Economics, Global
markets, Robert Prior-Wandesforde told reporters here.
The WPI-inflation, Wandesforde said, is set to touch a
height of 8 per cent by February-March, which will be
primarily contributed by a surge in energy and manufacturing

In its quarterly review of the monetary policy,
Reserve Bank had projected inflation at 6.5 per cent by
end-March and pegged the GDP growth at 6 per cent with an
upward bias.

Wandesforde said the apex bank`s actions were
sufficient to hint that the Indian monetary policy is moving
to an inflation-focused regime.

"RBI`s actions were more of preemptive to avoid an
asset bubble in the system. They may have done it to convince
the market that the monetary policy is now inflation-focused,"
Wandesforde said.

According to HSBC, the apex bank is likely to hike CRR
and the policy rates by another 1-2 per cent in the next few
months, to exit the easy monetary policy regime.

HSBC Global head of foreign exchange strategy, David
Bloom said emerging markets including India are expected to
lead the global economic recovery in the period ahead.

However, India needs to strengthen its
infrastructure-platform by investing more in rail, road and
airport projects using its massive foreign exchange reserves
besides strengthening the local currency, Bloom said.
"India have the option of building up the
infrastructure in India (using the forex reserves) and
building up a strong currency," Bloom said.

Bureau Report

First Published: Thursday, November 5, 2009 - 18:26

More from zeenews

comments powered by Disqus