RBI''s OUTLOOK FOR FY14 - HAS SOME POSITIVES!

By Ruma Dubey

It is after a long time that RBI shed a bit of its dovish outlook and presented a much better picture for FY14. And in the current mood of pessimism overruling the markets and India, this sliver of optimism comes as very good news. Its like indeed we all are parched to hear something which even remotely resembles a good news.

RBI, while presenting its outlook for FY14 had a lot of positive things to say. We are drowning in too much negativity around us, so let us concentrate only on the positives:

• Recovery is possible and can take shape later in 2013-14, but is predicated on better governance, the removal of supply constraints and maintenance of stability.
• Baseline real GDP growth outlook for 2013-14 is better than that in 2012-13. While presenting the statement in May 2013, it had projected a GDP growth of 5.7%, this was based on good monsoon and revival in domestic and global growth; monsoons have been good but growth has got worse. The growth was thus later scaled back to 5.5%
• Normal and spatially well-distributed rainfall so far during the south-west monsoon augurs well for the agriculture sector and is expected to boost rural demand for industrial goods and services.
• Water storage in 85 major reservoirs till August 8, 2013 was 66% above the last year’s level and 55% above the average of last 10 year’s storage. This would benefi t the Kharif and the Rabi crops, as also hydropower generation.
• Kharif crops till August 9, 2013 was 11 % higher than last year and 7% higher than the normal area sown till date.
• Overall, the inflation outlook appears to be better than in the previous year.
• Going forward, the CAD is expected to see correction due to trade policy measures taken to curb gold imports and price adjustments effected to moderate consumption of fuel products. CAD in 2013-14 is expected to be lower than the historic high of 2012-13 though it may remain higher than the ideal level of 2.5% of GDP.

The report has more pages which talks of troubles than anything to cheer about but that is not surprising given the fact that it has been one of the worst years of India Inc in recent times.

For now, today at least, let us look at whatever little positive is available. Tomorrow is another day…

PS: Its human nature, one’s own pain seems to diminish a bit when others also seem to be going through it. It is not Indian rupee alone which has been pulverized – the Brazilian Real, Turkish Lira, Malaysian Ringgit, Thai Baht and Indonesian Rupiah, all have depreciated sharply. So we have our domestic issues but the rupee tumble is more of an emerging market phenomena.