The economy is likely to grow between 7.1 per cent and 7.6 per cent during January-March quarter of financial year 2017-18. If this happens then the overall annual GDP growth rate will be higher than the 6.6 per cent projected by the Central Statistical Organisation (CSO) earlier.

The Government will announce the growth estimate on Thursday. Independent agencies, however, have already come out with their projections. An SBI research report said the growth could be around 7.6 per cent while ICRA estimated growth at 7.4 per cent. Both 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 GDP growth for Q4 and FY18 is likely to spring a positive surprise. “We expect GDP growth for Q4FY18 to be around 7.6 per cent and subsequently the FY18 growth to be at 6.7 per cent,” it said adding that industry is estimated to grow at 5.2 per cent while the figure for agriculture and services would be 3.3 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 higher food production as per 3rd advance estimate will push growth estimate in the farm sector. For industries, it argued that the pick up in corporate Gross Value Addition (GVA) of non-finance listed companies will help higher growth while boost in trade, transport and real estate sector will help the services sector.

“We expect 9.0 per cent 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.” It further said Italy’s bond market suffered a steep sell-off as concerns about political turmoil in the Euro Zone’s third-biggest economy intensified. The yield on two-year Italian debt was up more than 1.5 per centage points from Monday’s close. 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 of FY18 from 7.2 per cent in Q3 of FY18, 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 growth of the Indian gross value added (GVA) at basic prices in year-on-year (YoY) terms is likely to record a considerable recovery to 7.3 per cent in Q4 FY18 from 6.7 per cent in Q3 FY18, 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 per cent from +6.8 per cent), agriculture, forestry and fishing (to +4.5 per cent from +4.1 per cent), and services (to +7.8 per cent from +7.7 per cent).

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 of FY18, 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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