FICCI's latest Economic Outlook Survey puts across the GDP growth estimate for the year 2014-15 at 5.3%, with a minimum and a maximum range of 4.9% and 5.8%. This is a tad lower than the 5.5% growth estimate put out by the economists in the previous survey round and is mainly on account of bleak prospects for performance of the agriculture sector due to sub-par monsoon forecast. Regarding the performance of the industrial sector this year. The median forecast for industrial growth for 2014-15 is pegged at 3.1% and for agricultural sector at 2.1%. Further, services sector growth is expected at 7.0% this year and is only marginally higher than 6.8% growth recorded in 2013-14. On Inflation, the El Nino effect is expected to fuel inflationary pressure going ahead.

1. 1 | P a g e
Economic Outlook Survey
July 2014
Highlights
FICCI’s latest Economic Outlook Survey puts across the GDP growth estimate for the year 2014-15 at 5.3%, with a
minimum and a maximum range of 4.9% and 5.8%. This is a tad lower than the 5.5% growth estimate put out by the
economists in the previous survey round and mainly on account of bleak agriculture prospects due to sub par
monsoon forecasts.
Respondents however seem more optimistic regarding the performance of the industrial sector this year. The median
industrial growth forecast for 2014-15 is pegged at 3.1% and for agricultural sector at 2.1%. Further, services sector
growth is expected at 7.0% this fiscal year, only marginally higher than 6.8% growth recorded in 2013-14.
On the inflation front, participating economists expect prices to remain beyond the comfort zone. The El Nino effect is
expected to fuel inflationary pressure going ahead. Sharing their views on dealing with the price situation, the
economists pointed out that the announcements made in the recent past by the government to tackle inflation are
very much focused. They unanimously felt that the government has little choice but to strengthen supply side
infrastructure. There is an immediate need to ease the distortions in supply of food articles – from farm to market.
And the forthcoming Budget provides a good opportunity to the government to further move ahead and work on
inflation management.
In fact, respondents indicated that they are looking forward to the forthcoming Union Budget and the focus of the
budget should be on pushing growth and investments. Some of the other suggestions made by the economists
included-
 Clear roadmap for implementation of Goods and Services Tax (GST), which will give a huge boost to the economy.
Review of the Direct Tax Code (DTC) with a view to widen the tax base and rationalizing exemptions. These big
ticket reforms should be taken up as soon as possible.
 Signal that the government is looking at strict fiscal prudence. Chart out a path to contain subsidies and switch the
focus from non plan to plan expenditure. Put across a roadmap for disinvestment.
 Positive indications for the manufacturing sector would be critical. It is imperative to firm up the growth in
manufacturing sector, which will also aid employment generation enabling inclusive growth.
 Boost infrastructure spending. Fast track implementation of stuck projects.
 Indicate way forward on labor reforms
Participating economists expect the fiscal deficit to GDP ratio for 2014-15 to breach the target of 4.1% set in the
interim budget. The median forecast for fiscal deficit stands at 4.5%, with minimum and maximum range of 4.2% and
5.5%.
Further, India has the lowest tax to GDP ratio among its peers. The economists were asked for some suggestions to widen
India’s tax net. They mentioned that steps should be taken to bring more people in the ambit of formal employment and
widening the tax base should be given a priority. The respondents felt that sectors currently outside the scope of tax net
despite being at much higher incomes farmers should be brought under the purview of taxation. The participating
economists also said that greater clarity on issues like GAAR and retrospective taxation must be provided in the upcoming
budget.
The economists were also asked their opinion about setting up of a specialised asset management company for
acquiring/restructuring large scale non preforming assets.

2. 2 | P a g e
Economic Outlook Survey
Survey Profile
The present round of FICCI’s Economic Outlook Survey was conducted in the month of June 2014 and drew
responses from leading economists representing industry, banking and financial services sector. The economists
were asked to provide their forecast for key macro economic variables for the year 2014-15 as well as for Q1 (April
- June) FY15 and Q2 (July – Sept) FY15. In addition, opinion was sought on likely course of action that the new
government should take in dealing with existing issues like below average monsoon, non performing assets in the
banking sector, and measures to widen the tax net. Further, the economists were also asked to indicate what they
think should be the top priorities in the forthcoming budget.
In this regard, a majority of respondents were of the view that setting up a specialized asset management company will be a
good move as it will help improve the financial health of the banks. Also, it will free the balance sheets of banks and
infrastructure companies providing them the room to lend for other projects.

3. 3 | P a g e
Economic Outlook Survey
GDP growth for FY15 is expected to be at 5.3% in the latest round of FICCIs Economic Outlook Survey with a
minimum and maximum range of 4.9% and 5.8% respectively. Economists anticipate the economy to recover over the
year with growth rate pegged at 4.8% for Q1 FY15 and 5.1% for Q2 FY15.
Agriculture sector growth is expected to slow down in the current fiscal year to 2.1%. The minimum and maximum
range stood at 1.3% and 3.5% respectively in the current survey. With regard to the quarterly numbers, economist
expected the agricultural and allied sector to grow by 2.5% in Q1 FY15 and 2.0% in Q2 FY15. The expected moderation in
agricultural sector growth can be attributed to delayed monsoon arrival.
Further, economists seemed upbeat regarding the performance of the industrial sector. The sector is expected to
clock a growth of 3.1% in FY15, with a minimum and maximum range of 2.2% and 5.0%. In the first two quarters of the
current fiscal year the growth rate was pegged at 2.0% and 2.5% respectively.
Survey Results – Projections for key macro-economic variables*
Annual (2014-15) Q1 FY15 Q2 FY15
Growth Median Min Max Median Min Max Median Min Max
GDP 5.3 4.9 5.8 4.8 4.5 5.1 5.1 4.8 5.5
Agriculture & Allied 2.1 1.3 3.5 2.5 1.0 3.7 2.0 1.5 3.3
Industry 3.1 2.2 5.0 2.0 0.9 3.2 2.5 1.1 5.0
Services 7.0 6.2 8.3 6.5 5.9 6.8 6.5 6.2 7.3
*The findings of the survey represent views of leading economists and do not reflect views of FICCI. All forecasts represent median values.

4. 4 | P a g e
Economic Outlook Survey
The service sector growth has been in the range of 6.5/7.0% for past couple of years, lower than the double digit
growth witnessed before that. The moderation in growth is expected to continue this fiscal year as well. The sector is
expected to grow by 7.0% in FY 15, marginally higher than 6.8% growth registered in FY14.
Measures adopted by the government recently to arrest the elevated food prices might partly offset the impact of
subpar monsoon. Headline WPI and CPI (retail inflation) for FY15 is anticipated at 5.6% and 8.2% respectively, a tad
lower than the FY14 numbers. The lower and upper limit for WPI inflation for FY 15 was 5.1% and 6.5% respectively.
In the interim budget presented in February 2014, the fiscal deficit was estimated at 4.1% for FY15. However,
economists expect fiscal deficit to GDP ratio to breach this target for FY15. The participating economists expect the ratio
at 4.5% this fiscal year. In the first two months of 2014-15 already 45.6% of the budgeted fiscal deficit has been
exhausted.
Export growth noted a deceleration in Q4 FY14 y-o-y; however some improvement is on the anvil in coming quarters.
The advanced economies are gradually moving ahead on the recovery path. Also, recent initiation by the new
government to strengthen India’s bilateral ties is expected to bode well for our external position. The export growth for
Q1 FY15 is expected at 4.8%, and for the whole fiscal year at 3.0%. Import growth, on the other hand is expected to
remain in the negative terrain in Q1 FY15, however the forecast for the whole year is estimated at 5.0%.
According to survey results CAD as % of GDP will remain in the comfort zone and is expected to be at 2.5% in 2014-
15.
The Rupee value is forecasted at 60.0 against US dollar by end March 2015. The expected range is 58.0 (minimum) to
62 (maximum).
Survey Results
2.5
3.1
1.7
0.0
1.0
2.0
3.0
4.0
FY15 Q1 FY15 Q2 FY15
CAD as % of GDP Forecast
*The findings of the survey represent views of leading economists and do not reflect views of FICCI. All forecasts represent median values.

5. 5 | P a g e
Economic Outlook Survey
VIEWS OF THE ECONOMISTS
TH
EL NINO EFFECT MIGHT PRESSURIZE PRICES: CONTOURS OF THE CONTINGENCY PLAN THAT THE GOVERNMENT
SHOULD HAVE IN PLACE IN CASE THE PRICE SITUATION WORSENS
Persistently elevated inflation rate has been a cause of concern for quite some time now and has emerged as one of
the key impediments to growth. According to the latest available data, the WPI inflation rate touched a five month
high in May 2014 at 6.01%, being primarily driven by food and fuel prices. Moreover, with the El Niño effect playing
out this year upside risks to inflation have aggravated further.
As price levels continue to tread beyond the comfort zone, the participating economists were asked their views on
the possible elements of a contingency plan that the government can adopt to keep a tab on bulging prices.
The government in the past few days has taken steps to contain the price levels- which included - checking hoarding
and exports, releasing additional rice through the public distribution system and also tracking prices of some
essential commodities. These measures announced by the government have been much focused and found a broad
consensus among the participating economists.
Besides, it was unanimously felt that the government has little choice but to strengthen supply side infrastructure.
There is an immediate need to ease the distortions in supply of food articles – from farm to market. It was also
mentioned that the government should strengthen the efficiency of Public Distribution System and create a more
robust infrastructure for Food Corporation of India. Further, a majority of the economists who took part in the survey
felt that the extra food grain stored by the FCI should immediately be off loaded.
Some additional measures that were suggested included-
 Encouraging states to amend APMC Act and implement the same. States should be incentivised to delist
horticulture produce from APMC.
 resorting to imports through tie-ups for critical food items like pulses, oilseeds, onion etc in an event of food
shortage.
 multiplicity of taxes such as mandi tax on procurement must be reduced.
 providing farmers with timely inputs on rainfall patterns.
SETTING UP A SPECIALIZED ASSET MANAGEMENT COMPANY FOR ACQUIRING/RESTRUCTURING LARGE NON
PERFORMING ASSETS
India’s banking sector has been under stress for the past of couple of years noting a discernible increase in the non
performing assets amid moderating growth. Even though the latest numbers indicate a marginal improvement in the stress
advances (non performing and restructured) to gross advances ratio, but some amount of pressure might arise again. We
are yet to see how growth shapes up this year and how many projects are actually implemented.
In the current survey round economists were asked if setting up of a Specialized Asset Management Company for effective
recovery of large scale non-performing assets (NPAs) in sectors like infrastructure will be a good move. Majority of
respondents indicated that setting up a specialized financial asset will be a good move as it will help improve the financial
health of the banks. Also, it will free the balance sheets of banks and infrastructure companies providing them the room to
lend for other projects.

6. 6 | P a g e
Economic Outlook Survey
TOP PRIORITIES TO GIVE A PUSH TO GROWTH AND INVESTMENTS: UPCOMING BUDGET
The economists participating in the survey felt that the focus of the budget should be on growth and giving a push to
investments. Majority of the economists expect the following from the budget-
 Clear roadmap for implementation of Goods and Services Tax (GST), which will give a huge boost to the economy.
Review of the Direct Tax Code (DTC) with a view to widen the tax base and rationalizing exemptions. These big
ticket reforms should be taken up as soon as possible.
 Signal that the government is looking at strict fiscal prudence. Chart out a path to contain subsidies and switch the
focus from non plan to plan expenditure. Put across a roadmap for disinvestment.
 Positive indications for the manufacturing sector would be critical. It is imperative that we see firm growth in
manufacturing, which will also aid employment generation and thus enable inclusive growth.
 Boost infrastructure spending. Fast track implementation of stuck projects.
 Focus on food price management
 Indicate way forward on labor reforms
SUGGESTIONS TO WIDEN THE TAX NET
India has one of the lowest tax to GDP ratio among its peers. The participants were of the view that steps should be taken to
bring more people in the ambit of formal employment and widening the tax base should be given a priority. The
respondents felt that all sectors currently outside the scope of tax net despite being at much higher incomes should be
brought under the purview of taxation. Participating economists felt that greater clarity on issues like GAAR and
retrospective taxation is imperative and that the upcoming budget must provide the same.
The economists also mentioned that the government should continue efforts to get back the black money stashed abroad.

7. 7 | P a g e
Appendix
Outlook 2014-15 Outlook Q1
2014-15
Outlook Q2
2014-15
Key Macroeconomic variables Mean Median Min Max Mean Median Min Max Mean Median Min Max
GDP growth rate at factor cost
(%)
5.3 5.3 4.9 5.8 4.8 4.8 4.5 5.1 5.1 5.1 4.8 5.5
Agriculture & Allied 2.3 2.1 1.3 3.5 2.5 2.5 1.0 3.7 2.4 2.0 1.5 3.2
Industry 3.5 3.1 2.2 5.0 2.1 2.0 0.9 3.2 2.6 2.5 1.1 5.0
Services 6.9 7.0 6.2 8.3 6.3 6.5 5.9 6.8 6.6 6.5 6.2 7.2
Gross Domestic Savings (% of
GDP)
30.7 30.0 29.0 33.0
Gross Fixed Capital Formation
(% of GDP at current market
prices)
31.1 30.5 29.0 34.0 29.9 29.6 28.0 32.9 31.2 30.0 30.0 34.9
Fiscal Deficit (as % to GDP)
Centre
4.6 4.5 4.2 5.5
Growth in IIP (%) 4.1 4.5 2.7 5.0 2.5 2.8 1.2 3.5 3.1 3.0 1.4 5.0
WPI Inflation rate (%) 5.7 5.6 5.1 6.5 5.7 5.7 5.0 6.2 5.5 5.7 3.9 6.7
CPI combined new inflation
rate (%)
8.1 8.2 7.5 8.5 8.4 8.3 8.1 8.9 8.2 8.4 6.7 8.7
Money supply growth M3 (%)
(end period)
13.5 13.8 12.0 14.5 - - - - - - - -
Bank credit growth (%) 15.3 15.3 14.0 17.5 - - - - - - - -

8. 8 | P a g e
Repo Rate (end period) 7.75 7.75 7.25 8.0 8.0 8.0 8.0 8.0 7.75 8.0 7.5 8.0
Merchandise Export
Value in USD billion 339.2 328.1 325.0 400.0 79.3 77.0 75.0 90.0 103.1 81.9 81.0 185.0
Growth (%) 3.3 3.0 1.9 5.0 4.9 4.8 3.5 6.5 6.2 5.4 2.8 11.0
Merchandise Import
Value in USD billion 494.0 494.1 460.0 525.0 114.7 114.0 112.0 120.0 143.6 116.0 112.0 255.0
Growth (%) 4.4 5.0 2.0 7.3 -6.5 -7.2 -8.2 -3.3 2.3 2.8 -5.5 9.1
Trade Deficit (% to GDP) 8.4 8.1 7.6 9.5 9.0 9.3 10.2 7.5 7.3 7.2 5.0 9.8
CAD
Value in USD billion 48.2 50.0 32.1 62.5 14.6 15.0 13.4 15.4 5.7 5.7 5.6 5.8
as % of GDP at current price 2.4 2.5 1.6 3.0 3.0 3.1 2.2 3.6 1.9 1.7 1.1 3.2
US$ / INR exchange rate (end
period)
59.9 60.0 58.0 62.0 60.1 60.0 58.9 61.0 60.3 60.1 58.3 62.0