Economy to grow by 6.5 per cent

India’s economy will grow by 6.5 per cent over the next four years if there is a decisive mandate in the general elections, CRISIL said. But if there is no clear mandate, the economy could derail further.More than election outcomes, it is the policies that follow is what matters and election outcomes at best impact only sentiments, it said. An improvement in investment efficiency, which has fallen drastically over the last two years, is expected to kick in with faster project clearances, implementation of stalled infrastructure projects and resumption of mining activities. This, in turn, will support investment growth, especially when demand – both domestic and global – begins to rebound, improving capacity utilisation, thus laying the foundation for India’s entry into a phase of healthier growth.

The new government will have to focus on improving the efficiency of the economy. The evolving investment dynamics, however, show that neither a surge in investments nor improvement in efficiency witnessed during fiscals 2004-2011 (which led to near 9 per cent GDP growth) would repeat in the next five years.