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Elections to buoy growth in India-Goldman Sachs
April 19, 2013, 10:40 am


A UN report said India’s economy is likely to grow 6.4 per cent this year [AP]

General elections in India will be a “positive stimulus to the economy” according to the banking giant Goldman Sachs.

The US brokerage firm on Friday projected an ‘above-consensus’ growth of 6.4 per cent for the current fiscal year on factors like the upcoming general elections which, it said, will increase government spending, lower interest rates and lead to action on the policy front.

“We reiterate our above-consensus GDP growth forecast of 6.4 per cent. The key to an improvement in activity is a pickup in the investment cycle,” it said in a report.

It said higher government capex coupled with falling rates and policy reforms to ease bottlenecks and manufacturing export growth will drive investments during the ongoing fiscal.

“The year before the elections is generally associated with increased government spending. Indeed, government spending (as a percentage of GDP) has increased the year before the elections, in each of the last four general elections,” it said.

“Ongoing policy reforms to de-bottleneck infrastructure and other investments, particularly, the Cabinet Committee on Investments can help,” the Goldman Sachs report said.

Meanwhile a United Nations (UN) report said on Thursday, the Indian economy is likely to grow 6.4 per cent this year, outpacing the six per cent expansion in developing Asia-Pacific economies in the same period.

With inputs from Agencies

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