Mumbai: Macquarie Research has raised its growth forecast for 2009-10 to 7% and for 20010-11 to 7.5% after the economy grew at a better-than-expected pace in the quarter-ended March, it said in a recent note.
“Essentially, under reasonable and realistic assumptions about what the government can/will do, we expect an earlier move toward realisable trend growth of 7.5-8% per annum,” economist, Rajeev Malik wrote in a note.
Macquarie had an earlier growth estimate of 5.5% for 2009-10 and 6.5% for 2010-11.
On Friday, data showed the Indian economy grew 5.8% from a year earlier in January-March, matching the upwardly revised rate in the previous quarter. That was still the lowest in four years, but above analysts’ forecast of a 5.2% annual expansion.
October-December growth was revised from 5.3%. The central bank expects 2009-10 growth to be at about 6%.
In the 2008-09 fiscal year to 31 March, India’s economy grew 6.7%, its weakest in six years and well below rates of around 9% of the previous three years.
India’s low reliance on exports and an aggressive double-barrelled fiscal and monetary response softened the blow to the economy from the global financing challenges, the note said.
“The tectonic political change is likely to act as an acceptable steroid in reviving confidence and boosting financing for investment for the largely domestically-driven economy,” Malik wrote.
Political risk is likely to decline and Prime Minister Manmohan Singh would be able to undertake more reforms than he did in his previous term, Macquarie said.