S&P sees India’s economic growth improving to 6.4 % next fiscal

Global ratings agency Standard & Poor's (S&P), which had threatened a downgrade of India's sovereign rating to junk, today said it saw economic growth improving to 6.4 per cent next fiscal year.

The agency also retained its growth forecast for the current fiscal year at 5.5 per cent, half-a-percentage-point above that of the Central Statistical Office.

Geeta Chugh, S&P's credit analyst, attributed the increase to government welfare spending, the next general elections, improvement in private consumption, lower interest rates and a better show by agriculture that would take the growth number to 6.4 per cent in FY14.

She said the growth figure would rise further to 7.2 per cent in FY15 with mining and power sectors also starting to show improvement.

The comments come within a fortnight of the CSO forecasting a poor 5 per cent reading of GDP in the current fiscal, lowest in a decade.

According to Chugh, though the relative growth uptick had been factored into the sovereign rating, which was the lowest investment grade rating and the worst amongst the BRIC.