India’s GDP Dilemma – Ambit Cuts FY13 to 6.2%

Ambit Capital known for publishing a Bold report on how the Government was Paralyzed and things would come to a standstill even before FIIs began to Sell has not cut India’s GDP Growth estimate for FY 2013 to mere 6.2%, lower than 2008 crisis level where India witnessed a growth of 6.8%. Consensus GDP is still at 8.0% but will likely be downgraded.

Ambit is concerned about the sovereign debt growing at a much faster pace than nominal GDP in that region points to the forthcoming snowballing of Western sovereign debt:GDP ratios putting into risk the stability of the advanced economy banking system as well as GDP growth rates in that region.

The fate of Indian GDP growth is linked to the prospects of the Western world through the investment demand conduit. In the light of the above-stated dynamics that are likely to grip the Western world over the next year, investment flows into India will decline.

The following Chart shows Historical GDP of India.

What really worries us is the fact that the Prime Minister is silent on Corporate India’s Open Letter asking the Government for firm Policy, Reforms and an end to Corruption.