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S&P also retained its growth forecast for the current fiscal year at 5.5 per cent, half-a-percentage-point above the readings by the Central Statistical Office.
The global ratings major had earlier threatened to downgrade India’s credit ratings to junk status.
“The increased government welfare spending because of the next general elections, improvement in private consumption, lower interest rates and a better show by agriculture will lead to the growth number going up to 6.4 per cent in FY14,” Geeta Chugh, S&P’s credit analyst said.
According to the World Development Indicators, India’s gross domestic product rose from around $350 billion in 1997 to nearly $1.9 trillion in 2012 — growing almost five fold.
Palaniappan Chidambaram, India’s finance minister has repeatedly stated that his ministry is committed to adhering to the fiscal deficit targets and pegged the number for this year at 5.3 per cent.
The minister will present the Union budget this Thursday.
The S&P analyst said the growth number will go up further to 7.2 per cent in FY15 as mining and power sectors will also start showing improvement.
The comments come within a fortnight of the CSO forecasting a poor 5 per cent reading of GDP in the current fiscal, the lowest in a decade.
Chugh, however, clarified that the relative rise in growth has already been factored in the sovereign rating.
The agency had cited a host of concerns including the sagging growth numbers, fiscal problems and a lack of policy initiatives in the past as main areas of concern.
Chidambaram has taken steps to revive investor confidence since taking back charge in August.
The credit analyst said these steps will lead to a gradual recovery, but warned that the agency would look for progress on the implementation front.