State Bank of India expects the country's GDP growth to increase to 7.9 per cent this fiscal even as the recent growth numbers "disappointed".
Also, a 25 basis point cut in repo rate on June 2 now looks a certainty and may be a surprise if it does not happen, Soumya Kanti Ghosh, Chief Economic Adviser, State Bank of India Group, said in a note issued after the CSO released GDP numbers on Friday.
The Central Statistics Office (CSO) on Friday said that Indian economy grew 7.3 per cent in 2014-15 and 7.5 per cent in fourth quarter.
The recent growth numbers are disappointing given the significant decline in 'gross value added' in fourth quarter of 2014-15 (at 6.1 per cent from 7.8 per cent projection and a secular decline from 8.4 per cent in Q2 FY'14-15), according to Ghosh.
Interestingly, this difference was not as striking in earlier quarters.
The fourth quarter GDP growth at 7.5 per cent may be "a little bit fortuitous" given that the subsidy numbers for this period has declined significantly, he said.
The decline in GVA, according to Ghosh, is primarily attributable to the slowdown in services, driven by a public administrative sub-segment (0.1 per cent in Q4 FY'14-15 vis-a-vis 19.7 per cent in Q3).
This was not entirely unexpected as the Government had virtually stopped spending in fourth quarter to meet the deficit target, Ghosh said.