Indian economy is likely to grow between 7.1-7.6 per cent during January-March quarter (Q4) of financial year 20171-18. If it happens, then the annual growth rate will be over 6.6 per cent projected earlier.

The Government will announce the growth estimate on Thursday. Independent agencies, however, already came out with their projections.

A SBI research report said that the growth could be around 7.6 per cent, while ICRA estimated 7.4 per cent. Both of these are higher than the Central Statistical Organisation’s (CSO) own estimate of 7.1 per cent.

SBI Research Report

A research report, authored by Soumya Kanti Ghosh, Group Chief Economic Adviser of SBI, said that the GDP growth for Q4 and FY18 is likely to spring a positive surprise.

“We expect GDP growth for Q4FY18 would be around 7.6 per cent and subsequently the FY18 growth would be at 6.7 per cent,’’ it said, while adding that the industry is estimated to grow at 5.2 per cent, agriculture and services at 3.3 per cent and 8.2 per cent, respectively.

The report has specific reasons for higher-than-estimated growth in each of the sector. For example, it said that higher food production as per Third Advance Estimate will push the growth estimate in farm sector.

For industries, it argued that pick-up in corporate gross value addition of non-finance listed companies to help higher growth, while boost in trade, transport and real estate sector will help the services sector.

“We expect 9.0% growth in Manufacturing GVA in Q4 due to smart growth in Corporate GVA as both of these are strongly positively correlated. Corporate GVA, which decelerated since Q3 FY17, rebounded in Q2 FY18 and exhibited positive,” the report said.

It, however, cautioned that a higher-than-expected GDP growth for India “should not propel us into a false delusion of an impending rate hike cycle’’.

Italy crisis

It further mentioned that Italy 's bond market suffered a steep sell-off as concerns about political turmoil in the euro zone's third-biggest economy intensified.

Short-dated Italian bond yields - a sensitive gauge of political risk - soared 1.5 percentage points from Monday to their highest since 2013 in their biggest move in nearly 26 years. This is also perhaps a reason of oil going off the boil in the last few days.

ICRA’s estimates

Rating agency ICRA estimates that the domestic GDP growth rate is expected to improve to 7.4 per cent in Q4 FY2018 from 7.2 per cent in Q3 FY2018, exceeding the implicit forecast of 7.1 per cent embedded in CSO’s Second Advance Estimate of National Income for 2017-18.

As per ICRA, the gross value added (GVA) growth at basic prices in year-on-year (YoY) terms is likely to record a considerable recovery to 7.3 per cent in Q4 FY2018 from 6.7 per cent in Q3 FY2018, thereby rebounding above 7.0 per cent after a gap of five quarters.

This revival in Q4 FY2018, relative to Q3 FY2018, is expected to be broad-based, supported by an uptick in industry (to +7.7% from +6.8%), agriculture, forestry and fishing (to +4.5% from +4.1%), and services (to +7.8% from +7.7%).

Aditi Nayar, Principal Economist with ICRA, said, “The uptick in economic activity that set in during the second half of 2017, is expected to have strengthened in Q4 FY2018, led by a healthy rabi harvest, robust volume growth in various sectors, an improvement in corporate earnings and a favourable base effect.”

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