Annual car sales declined by about 8 per cent in 2013-14, as high inflation eroded disposable incomes of buyers in an already slowing economy 
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Annual car sales declined by about 8 per cent in 2013-14, as high inflation eroded disposable incomes of buyers in an already slowing economy Although the anticipated victory for the Bharatiya Janata Party (BJP) in the Lok Sabha elections has pushed the stock market to a record high, analysts do not expect the economy to bounce back even if a Narendra Modi-led government takes over at the Centre.
The latest Reuters poll of over 20 economists taken last week showed the Indian economy is likely to clock a 4.7 per cent growth in the fiscal year that ended this March, with growth seen picking up only to 5.5 per cent in the current fiscal year.
Prospects for a strong economic rebound in India are dim as industry remains weak and the power of the new government to drive change will be muted if it has to form a coalition with other parties, which in the past have held policy hostage to local agendas, according to the Reuters poll.
Anubhuti Sahay, senior economist at Standard Chartered Bank, said a strong government with the ability to legislate change is needed to put the economy back on track.
"If we get into a situation where the government, due to coalition politics, is not able to implement good policies, than that is the biggest risk. We have seen such situations since 2010," she added.
The RBI is expected to keep its key repo rate steady for another year before a modest cut in the second half of 2015, the poll also showed.
Maruti Suzuki chairman R. C. Bhargava echoed a similar view.
"We expect sentiments to revive once the new government takes over but we do not expect any dramatic growth in car sales during 2014- 15," he remarked.
A weak economic outlook for the euro zone and growing trade problems with the US does not help the outlook for exports, either.
The likelihood of the El Nino effect adversely impacting the monsoon rains have also added to the uncertainty.
| GLOOMY GROWTH SCENARIO -The latest Reuters poll of over showed the Indian economy is likely to clock a 4.7% growth in 2013- 14.Growth may pick up only to 5.5% in the current fiscal year -Prospects for a strong economic rebound in India are dim as industry remains weak and the power of the new government to drive change will be muted if it has to form a coalition with other parties -The RBI is expected to keep its key repo rate steady for another year before a modest cut in the second half of 2015, the poll also showed -The Indian economy has hit one of its worst phases in recent history to record the dreaded sub 5 per cent rate of growth for two years in a row for the first time in 25 years -The last time that the pace of the Indian economy had slumped to sub 5 per cent growth for two years in a row was in 1988 -The RBI has increased interest rates three times since Raghuram Rajan took charge as governor in September |
Courtesy: Mail Today
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