Poll sees India’s Q4 GDP growth at 5%

Poll sees India’s Q4 GDP growth at 5%  (Photo: Mint)
Poll sees India’s Q4 GDP growth at 5% (Photo: Mint)

Summary

Economists’ estimates ranging between 4.4% and 5.4% places March quarter growth higher than the Reserve Bank of India’s projection of 4.2%.

NEW DELHI : The Indian economy likely grew 5% in the March quarter, improving from 4.4% in the preceding quarter, showed a Mint poll of 18 economists, owing to robust demand in the services sector. Growth is, however, expected to stay uneven across sectors.

GDP data for the fiscal fourth quarter is slated to be released on 31 May.

Economists’ estimates ranging between 4.4% and 5.4% places March quarter growth higher than the Reserve Bank of India’s projection of 4.2%. The median projection suggests the full-year growth could be 7.0%, higher than the central bank’s 6.8% forecast.

Graphic: Mint
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Graphic: Mint

“Economic activity in January-March remained uneven, with the domestic demand for services outpacing that for goods, and, surprisingly, robust exports of services amidst a contraction in merchandise items," said Aditi Nayar, chief economist at Icra Ltd in a 24 May report.

“Lower commodity prices offered relief for margins in some sectors, while trends in investment activity and government spending were mixed," she added.

Several organizations lowered India’s growth projection from their initial forecasts following disruptions caused by the Russia-Ukraine war, which led to slower global growth and tighter monetary policy worldwide.

The International Monetary Fund (IMF) and the World Bank expect the Indian economy to have grown at 6.8% and 6.9%, respectively, in 2022-23.

Despite the tough global backdrop, the Indian economy seems to be growing steadily, with the central bank having raised its GDP growth projection for FY24 to 6.5% in April from 6.4% in February.

Nevertheless, with inflation having eased further, the RBI will likely go on a long pause to support growth. The Monetary Policy Committee (MPC) is scheduled to meet 6-8 June.

“We expect the RBI to stay on an extended pause, given CPI inflation is still way above the target 4%, and there are upside risks on the horizon from monsoon and oil price trajectory. Unless growth slows materially, the RBI is unlikely to embark on a rate cutting cycle," Dhiraj Nim, economist at ANZ Research said.

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