India’s gross-value added growth is expected to quicken to 7.6 per cent this year from 7.2 per cent in 2015-16, driven by sustained support from public capex spending, says a DBS report.

According to the global financial services major, while private sector activity remains subdued, high frequency fiscal numbers point to sustained support from public capex spending.

“We expect gross-value added growth to quicken to 7.6 per cent year-on-year this year from 7.2 per cent in FY15/16,” DBS said in a research note.

According to DBS, after an upside surprise from China, India manufacturing PMIs also jumped in October, affirming signs of a cyclical upturn in the region. India’s October Nikkei manufacturing PMI ticked up to a nearly two-year high of 54.4 from September’s 52.1.

“The improving order pipeline is encouraging and points to better industrial and business outlook. Also, being a de facto business confidence/ sentiment gauge, these PMIs partly reflect broad optimism on the back of strong asset market performance and stable rupee,” the report said.

“The upcoming seasonal festive boost should provide some relief, accompanied by better consumption on wage increases and a normal monsoon,” the research note said.

Regarding inflation, the report said price pressures meanwhile are under watch with the headroom for monetary easing likely to narrow going into next year.

The monetary policy committee (MPC) lowered the repo rate to 6.25 per cent from 6.50 per cent at the end of two-day deliberations on October 4.

The next meeting of the MPC is scheduled on December 6 and 7.

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