India's economy will likely grow at 6.7% in the financial year starting April, industry chamber Ficci forecast on Friday, revising upward its previous projection of 6.5% for the next fiscal.
“This improvement is largely based on the expectation of a possible cut in the policy rates, which is expected to have a positive impact on industrial growth and consumption,” the chamber said.
“The revival in sentiment reflects cautious optimism and is an indication of improved sentiment post September 2012, mainly due to the government's renewed thrust on the reforms agenda,” the chamber's president Naina Lal Kidwai said.
Moreover, according to a Ficci survey, most of the respondents expected a cut of 25-50 bps in the benchmark lending rate in the forthcoming review of the monetary policy, scheduled for January 29, by the Reserve Bank of India.
A quarter of respondents also expected a cut of 25-50 basis points in the mandatory cash reserve ratio. A majority also felt that a reduction of 75-100 bps in the benchmark lending rate in the next fiscal is more likely.
“The possibility of the RBI cutting rates will provide the industry a fresh dose of oxygen, and along with the expected US recovery, will breathe some life back into industry,” Kidwai said.