India's growth "remains trapped in a low range" and the country is likely to see a GDP growth of 5.3 per cent in the next fiscal year (FY15), a marginal improvement from the ongoing financial year (FY14), according to a report by global financial services major Standard Chartered.
According to Standard Chartered, outcome of the May 2014 elections would hold the key to a sustained growth revival.
StanChart maintained its FY14 GDP growth forecast at 4.7 per cent and in the next financial year (FY15). It also said, "...an unexpected election poses risks to our forecast on both sides."
According to advanced estimates by the Central Statistics Office, India's GDP in the current fiscal year would improve to 4.9 per cent from 4.5 per cent a year ago, mainly on account of good performance of the farm sector.
On the official advance GDP growth estimate Standard Chartered said, "We think this improvement is illusory, as FY14 growth was pushed up by data revisions to FY12 and FY13 GDP."
Normalising the data for all years for statistical anomalies is likely to confirm that growth lost momentum in FY14 relative to FY13, the report added.
It also said that consumption and investment, which contribute more than 90 per cent of GDP, slowed markedly. Moreover, non-agricultural GDP excluding government expenditure revealed sluggish private-sector activity.
"Our view that India's growth remains trapped in a low range remains intact," it added.
"While the government has recently taken steps to improve the investment climate, the positive impact of these measures is unlikely to be felt until election-related political uncertainty is over," it added.
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