India's GDP Likely Grew By 7.3 Percent In March Quarter: Reuters Poll

NDTV Profit Team

30 May 2018, 11:59 PM IST

GDP expanded an annual 7.3 percent in the March quarter, against 7.2 per cent in the December quarter

The March (Q4) quarter would have the fastest expansion since before the demonetisation in November 2016 and the implementation of Goods and Services Tax (GST) in July last year. Even Moody's Investors Service on Wednesday projected the GDP growth forecast to 7.3 per cent in 2018, albeit lower than the earlier forecast of 7.5 per cent.
The experts attribute the growth to strong dynamics and lack of impact of external volatility. "Domestic dynamics are very strong and external volatility won't derail the current economic recovery," noted Hugo Erken at Rabobank, one of the most accurate forecasters on India GDP, and whose view is that growth reached 7.7 percent on a normal basis, well above the 7.3 percent median.
On a GVA basis, there is an expectation of 7.5 percent growth, higher than the 7.1 percent median in a Reuters poll for that metric.
The GDP numbers will be released on Thursday at 5.30 pm. Subhash Chandra Garg, Economic Affairs Secretary said on Monday. It was expected that annual growth was between 7.3 and 7.5 percent in the March quarter.
Monsoon rains hit the southern state of Kerala on Tuesday, a few days earlier than normal, the MeT department said. This potentially brightens the outlook for agricultural output and the economy.
After the economic growth faltered sharply for the three quarters of last calendar year (2017), India regained its status as the world's fastest-growing major economy for the October-December quarter.
Economic growth is roughly going to be the same through the fiscal that commenced on April 1, atleast this is what the two-third of the economists said in the poll. The remaining 33 per cent of the economists, however, believed that the growth would pick up. That overall steady - but strong - view was endorsed by expectations that manufacturing activity slowed only slightly in May. The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, would be 51.5, a tad weaker than April's 51.6 but still comfortably above the 50-mark that separates growth from contraction, the poll predicted.
As growth turns robust and prices are on the rise, the Reserve Bank of India (RBI) may change its policy stance next week.
Owing to higher fuel and food prices, annual retail and wholesale inflation accelerated last month (April). In response, some economists changed their views to expect a more hawkish RBI at its June policy meeting.
"The RBI will hold steady in June meeting. The central bank will probably wait for further clarity on the monsoon outturn and the increase in minimum support prices (MSP) for summer crops," said Charu Chanana at Continuum Economics. "A change in stance from neutral to 'withdrawal of accommodation' remains likely at the June 4-6 meeting."