Mumbai: Citigroup on Wednesday said it expects India’s economic growth to pick up in the second half of FY12 on increased investments due to which it is maintaining an overall GDP growth target of 8.1% for the fiscal.
“We expect FY12 to be a year of two halves. In the first half, between April and September, we expect growth to come in the 7.5-7.8% range. We are hoping for recovery in the second half,” Citi Investment Research’s managing director (economic and market Analysis) Rohini Malkani told reporters.
One of the “main assumptions” for maintaining the 8.1% GDP growth target, Malkani said, is an upswing in investments during the second half of the current fiscal.
It being the last year of the 11th Five Year Plan (2007-12), investments would go up while corporates, a majority of whom have not shelved their investment plans, will also invest, she said.
The comments come within ten days of data for January- March 2011 quarter showing GDP growth slowing down to 7.8%, which in turn, led to scepticism over the growth outlook for FY12 and whether the government will be able to achieve its budgetary target of a GDP growth of 9%.
A deceleration in investments, as observed in the January-March quarter, will bring the GDP down to 7.2% for FY12, she said.
On the fiscal deficit front, Malkani said, there will be a “slippage” and it will go up to the 5.1 to 5.50% level from the budget target of 4.6%.