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India to see modest recovery in growth at 5.6%: Citigroup

A modest recovery is on the cards for the Indian economy and it is expected to clock 5.6 per cent GDP growth in 2014-15, says a Citigroup report.

“While recent macro data has stayed sluggish, we maintain our expectation of a modest recovery in FY15 GDP to 5.6 per cent,” Citigroup said.

The output and order pipelines have been affected by elections and political uncertainty and there could be a recovery in factory activity post elections as clarity emerges on the political front.

The findings of the report comes when the HSBC India Manufacturing Purchasing Managers’ Index (PMI), a measure of factory production, stood at 51.3 in April, unchanged from March, amid moderate expansion of business orders.

Moreover, monthly production in eight core infrastructure sectors also grew by just 2.5 per cent on a year-on-year basis in March compared to 4.5 per cent in February.

According to Citigroup, a poor monsoon could be a downside risk to the GDP estimate, while a decisive election verdict could offset such risks to some extent.

“A poor-bad monsoon could be a downside risk to our estimate but a decisive election outcome and consequent uptick in consumer and business activity could offset such risks to some extent,” the report said.

According to Citigroup, Industrial production Index is expected to remain soft in March.

“As a result of continued weakness in infrastructure sector and ongoing contraction in automobile sector, we expect Industrial production to remain soft in March compared to (-) 1.9 per cent year-on-year in February,” the Citigroup research report said.

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