GDP likely to grow 6.4 per cent in 2015

Mumbai: The country's Gross Domestic Product (GDP) is likely to grow at a rate of 6.4 per cent on the back of pick-up in investment cycle in 2015, says a report.

"With the new government at the Centre and its effort to bring in big ticket reforms, investments are likely to come in. This will lead to a healthy growth of 6.4 per cent in 2015," Dun & Bradstreet Senior Economist Arun Singh said in a report released here on Wednesday.

However, the economy is expected to grow at a rate of 5.3 per cent in 2014, it added.

The report further said the country's near-term outlook hinged on a benign inflation trajectory, uptick in industrial activity and falling crude oil prices.

"Several policy initiatives of the government including shifting public spending away from energy subsidies towards investments in physical and social infrastructure, along with RBI's financial sector reforms would also help to accelerate the pace of growth," the report said.

The multi-directional policy approach of the new government is likely to provide required impetus to overall economic activity going forward, it said.

During the first half of 2014, the economic growth rate stood at 5.1 per cent as against 4.1 per cent during the year-ago period.

"GDP growth is expected to edge slightly higher during the second half, largely aided by the fall in global crude oil prices and resilient services sector," the report said.

It said that factors such as decline in input prices, de-bottlenecking of stalled projects, pick-up in mining sector activity and the government's push to make the country a manufacturing hub are likely to accelerate industrial activity to 5.1 per cent during 2015.

The report said the services sector would grow at 7.8 per cent in 2015, driven by some revival in industrial activity.

"The government's digital drive across the nation (Digital India) is expected to dramatically boost the domestic infotech sector," it said.

The D&B report said the WPI inflation could ease to 4.2 per cent in 2014 from 6.3 per cent a year ago and slightly edge up to 4.5 per cent in 2015.

"Administered price corrections, weak agricultural production and geopolitical issues would continue to pose upside risks to inflation during the next year," the report said.

On the export front, the D&B report said that a double digit growth of 10 per cent in 2015 is possible on account of a lower base effect, a downward bias in the rupee and improvement in external demand conditions.