Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

9% GDP growth for FY12 looks tough
Thu, 5 May Pre-Open

The reality has slowly started to sink in. Expert after expert has begun to jump onto the bandwagon. The latest to do so is Mr Basu, the chief economic adviser to the finance ministry. We are referring to the exercise of predicting India's GDP growth for the current fiscal i.e. FY12.

Talking to the media, Mr Basu has opined that the target that the Government has set for itself in February is getting increasingly out of reach. It should be noted that back then, the Government had forecast India's annual economic growth in the range of 8.75% to 9.25% for the fiscal year FY12.

However, only a couple of months into the projections and alarm bells have started ringing. Courtesy still higher crude oil prices, stubborn inflation and the possibility of higher interest rates, the trimming game was already on amongst the private economists. And now the Government too has moved into their camp.

Elaborating further, Mr Basu said that 9% growth is going to be tough especially if crude prices remain high. This is the most important factor that is spoiling the chances, believed Basu. Indeed. Unlike other resource rich countries, India is overwhelmingly dependent on imports for its energy needs. Not a good position to be into when energy prices are in gravity defying mode.

As per estimates, every US$ 10 per barrel increase in crude prices runs the risk of shaving off India's GDP growth by 0.3-0.5 percentage points.

Thus, what higher crude prices will end up doing is put the already grave situation on the inflation front in further jeopardy. Of course, we can live with both higher inflation as well as higher growth rates for some time. But it is not the right strategy to adopt as the correction that ensues from such a strategy can last for a long time, putting the long term economic growth at risk. Thus, the RBI is taking no chances and going in for tightening measures so that inflation is under control even if it means below par growth in the near term. This is the reason 9% growth in the current fiscal looks a little hard to achieve.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "9% GDP growth for FY12 looks tough". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.