Indian rupee needs a major push of positive sentiments to move back to Rs 55 level against the US dollar, but that is likely only after March or post general elections, India Ratings chief Atul Joshi feels.
"Fundamentals are not reflected into current Indian rupee levels and it needs to move back to 55 level. But, since its fall was due to negative sentiments, positive sentiments should create a bias towards 55, but that would be post March and may be post elections," Atul Joshi, MD and CEO, India Ratings & Research, said in an interview. India Ratings is the Indian unit of global giant Fitch Ratings group.
Joshi, however, said that elections as such are unlikely to have much impact on GDP growth rate of the country and a recovery process is already underway and that is unlikely to stop, unless a new government reverses some reforms.
"Wheels have started turning, so it is unlikely it will stop and we would see GDP growth at something closer to 4.9 per cent this year even if nothing much happens.
"We are expecting good results from at least two harvest seasons and the positive momentum should now move to the services and agriculture sectors as well.
"The worry that we had was that agriculture was not performing well for last couple of years. Now an improvement on that front would create a lot of rural consumption and that would result in an uptick in manufacturing and on back of that services sector would also get a boost," he said.Within services, India Ratings sees lot of momentum in financial services which has grown impressively in recent past despite an overall sluggishness in services sector.
This is not about any drastic changes in numbers, it is rather about change in psychological barriers, he said, adding that the noise that India is sinking and everything is going wrong will go away.
"We have already reached the bottom and now from here, the recovery will start. So, what we see next fiscal year is around 5.6 to 5.8 per cent of GDP growth. So, there won't be any drastic change by moving to 6 per cent and above.
"Elections or no elections, that would not have much impact on the GDP number, unless there is a rollback of policies and measures which is a very unlikely event. That would be like government going backwards and I don't think any government would do so,"