AMLENDU BHUSHAN KHAN
New Dwlhi : India’s economic growth accelerated to a slower-than-expected 7.3 percent in the three months through September from a provisional 7.1 percent expansion in the previous quarter, government data showed on Wednesday.
“The growth is way below not only our expectation but market expectations. This shows the worrying trend of contraction in fixed capital formation of the investment is deepening further.
“The growth is coming only from the consumption side. Investment recovery is not happening. Post-demonetisation the situation is really grim whether you look at any sector or talk to the people. Growth certainly is going to be hit in the third and fourth quarters.”
As per economist Shilan Shah “In terms of the policy implications, today’s release is unlikely to have much of an impact.
“The RBI itself has expressed doubts about the quality of the GDP data and, in any case, its attention is likely to have turned to the impact of the government’s demonetisation announcement at the start of this month.” Shah said
“In the near term at least, this is likely to weigh on activity in sectors with high reliance on cash transactions.
“With the MPC (monetary policy committee) having already shown that it is willing to prioritise growth even at the risk of missing targets for inflation, we think that it will attempt to cushion the blow from demonetisation with another 25 bp cut in the repo rate (to 6.00 percent) in next week’s policy meeting.”
“Both the GDP and GVA expansion in Q2 FY2017 trailed our expectations, led by lower-than-expected agricultural growth and a contraction in mining, ICAR economist Aditi Nayar comment on the GDP.
“Today’s release imparts a further downside to our GDP and GVA growth forecasts of 7.5 percent and 7.3 percent for FY2017, which we had revised downward post-demonetisation.
“The deceleration in manufacturing growth in Q2 FY2017 relative to Q2 FY2016 was in line with our expectations, reflecting the lagged effect of a rise in commodity prices on earnings amid modest demand.”
“We have already lowered our number and we are now anticipating 6.8 percent (percent growth) for this year.
“I don’t have to alter my numbers much based on today’s data because anyway a lot is uncertain for the next two quarters.
“Public spending is good. I was expecting it to be a little lower, so that is impressive. I’m good with the numbers that they have given and I wouldn’t alter anything in my projections.”
