Expert Views: Indian economy grows 7.7 percent in March quarter

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India’s economy grew 7.7 percent in the three months through March from a year earlier, government data showed on Thursday, faster than a revised 7.0 percent in the previous quarter.

The annual pace for the latest period beat a Reuters poll forecast of 7.3 percent growth.

For the 2017/18 full fiscal year ended in March, growth was 6.7 percent.

SHILAN SHAH, INDIA ECONOMIST, CAPITAL ECONOMICS

“The acceleration was in large part due to a rise in household consumption growth, which tallies with other consumption indicators such as vehicle sales strengthening last quarter.”

“Looking ahead, growth should remain strong. The recent manufacturing PMIs have been upbeat. Government consumption growth is also likely to strengthen further this year as the 2019 general election comes onto the horizon.”

TERESA JOHN, ECONOMIST, NIRMAL BANG INSTITUTIONAL EQUITIES, MUMBAI

“Broadly the recovery remains on track and should sustain for at least the next four to six quarters. For FY19, we are expecting a growth of 7.5 percent.”

“As a crude importer, higher oil prices are negative, but we don’t expect a significant downturn in the economy. We have cut our FY19 GDP forecast by 20 basis points taking into account rising oil prices and potential global trade wars.”

“In terms of RBI’s outlook, we expect a rate hike soon. There’s a 50 percent chance of a rate hike happening in June.”

From FY14 and FY2018, people moved from banks to commercial paper markets and corporate bond markets because the market yield was lower than the bank lending rate. But now, the situation has reversed, so you will see a growth in banks’ credit growth.”

GARIMA KAPOOR, ECONOMIST AND VICE-PRESIDENT, ELARA CAPITAL, MUMBAI

“A USD 10/bl increase in crude prices can impact growth by ~ 20-30 bps. The impact works through two channels – decline in demand owing to rise in prices and higher cost of borrowing as interest rates increase with upside risks to inflation.”

“Apart from high oil prices, another factor that could potentially add downside risk this year is a possible moderation in global trade growth amid continuing tensions.”

“We expect RBI to revise its policy stance in June and follow it up with a hike of 25 bps in Aug policy. Of the factors that RBI mentioned as risks in its April policy, an increase in global crude oil prices has come to fruition.”

“We expect FY19 credit growth to improve marginally to 12-13 percent with private sector banks leading the improvement, with public sector banks being constrained by capital requirements and resolution of stressed corporate loans.”

TUSHAR ARORA, SENIOR ECONOMIST, HDFC BANK, NEW DELHI

“There are some bad bugs in the form of rising oil prices, higher bond yields and lingering non-performing asset issues, affecting the overall sentiment related to the Indian economy. However, today’s GDP number is very comforting and should put a lot of concerns to rest. (It) Seems like we have moved beyond the teething troubles related to GST implementation. The pick-up in investment activity (fixed capital formation) is also a good sign. If the government can provide some impetus to the exports sector, the main drag at the moment, we could soon see the headline number inching close to 8 percent.”