Mumbai: India’s economy may grow 6.2% in 2009-10, UBS said in a report, revising its estimate from 5.2%, citing lower interest rates, smaller excess capacity and a fall in risk aversion.
The Reserve Bank of India (RBI) has forecast growth at about 6%.
“The main reason for this is a more resilient consumer,” UBS economist Philip Wyatt said in a research note.
“A full-blooded recovery in fixed investment would need stronger profits, whereas consumption can benefit earlier from lower interest rates once confidence recovers,” he wrote.
Industrial output could pick up in a limited way to 5-8% in the fiscal year ending in March 2010, from 2.4% in the past year but move decisively above 10% in 2010-11, UBS said.
Exports may remain slow for most of 2009-10 and said the global economic growth would act as a “speed limit” for a return to 9% gross domestic product (GDP), UBS said.
“We see 2009-10 as a stabilisation year for real GDP, followed by a return closer to potential growth of 7-8% growth in 2010 as global economic activity picks up,” it said.
The central bank projected GDP growth to be 6.5-6.7% for the 2008-09 fiscal year. In the previous three fiscal years, the economy expanded at or more than 9%.