Stating that the worst is over for the Indian economy, financial major Citigroup said the country is likely to clock a growth rate of 5.4% in 2012-13 fiscal year.
Citigroup in a research report said that "Going forward, while we maintain our view that the worst is over, we maintain our FY'13 GDP estimate of 5.4% as the anticipated pick up in industry could likely be offset by the poor summer crop output."
The report said that headline growth is likely to improve as consumption will likely benefit in a pre-election year while investments could get a leg up with the National Investment Board.
The government data said that the economy grew by 5.3% in the July to September period of the current financial year, pulled down by poor performance of manufacturing and agriculture sectors. The gross domestic product had expanded by 6.7% in the same period of last fiscal.
India's GDP growth was at 5.5% in the Q1 of 2012-13.
On the rate cut front, Citigroup said that there will be a easing of 50 basis points in fiscal year 2013, and there is a very little probability that the RBI will go for a rate cut in its December meeting.
The report said that "While we maintain our 0.50% of easing in FY'13, the 5.3% 2QFY13 GDP reading v/s our expectation of 5 per cent does reduce the probability of RBI action in the December 18 policy."
Some of the major events prior to the RBI policy meet include policy progress in the Winter Session of Parliament, inflation data on December 12th and December 14th and IIP data on December 12th.
Citigroup said that "We expect some traction on investments and fiscal measures cash transfers and tax reforms. That apart, our estimates remain the same."
According to the report, GDP growth would be at 5.4% in FY'13 and 6.2% in FY'14, inflation around 7%, policy rates easing of 0.75% by FY'14, deficits both fiscal and current account deficit elevated, but lower than the past.