Union Budget 2015-16 Economic Survey: Weak global demand barrier to 8.5% GDP forecast, says StanC

Economic Survey_4

The Economic Survey projected FY16 Gross Domestic Product (GDP) growth in the range of 8.1 – 8.5 under the new time series data, farm growth at 4 percent and said the government is committed to fiscal consolidation through expenditure control which will help reduce fiscal deficit.

Samiran Chakraborty, MD, Head, South Asia Macro Research, Standard Chartered Bank, while analysing the report said the lower end of the estimate is possible but there exists quite a few headwinds. Maybe the survey itself is talking about one risk that is global demand not being there which will affect our export growth. Another risk being that the terms of trade is shifting from agriculture towards more industry, from rural to urban. What kind of demand side impact it is going to have or how to go about the fiscal consolidation process.

So, given these headwinds, going all the way up to 8.5 percent might be difficult. But 8.1 could be an optimistic case. We are working with more in the range of 7.7-7.8 at the moment. But what is also interesting is that if you come to the nominal GDP part of it we have to consider now the fact that the Wholesale Price Index (WPI) will have a much higher share in the GDP deflator. Since the WPI is negative at the moment, you might not get the GDP deflator to be as high as 5.5 percent.

Share this Story

About epicresearch


© 2008-14. All Rights Reserved. Epic Research Pvt. Ltd.