India's GDP wil grow further, say ratings agencies

After marginal improvement in second quarter GDP readings, leading rating agencies have said the momentum is likely to continue into the second half with a likelihood of the economy faring better than the first half.

On Friday, the government data showed that the economy fared better than expected growing at 4.8 percent in the second quarter. In Q1, the same stood at 4.4 percent, taking the overall growth in H1 to 4.6 per cent.

Credit rating agencies like Crisil and India Ratings have reasoned the possibility of higher growth figures in H2 on increasing consumption due to good monsoons coupled with spurt in exports, which for the many months have been clipping in high double-digit.

“We expect growth to be higher in the second half, boosted by a pick-up in consumption growth on the back of above-normal monsoons and strong growth in exports,” Crisil said in a note.

Similarly, India Ratings said, it expects the economy to recover further from the current levels during the remaining two quarters, but added “this improvement is likely to be only somewhat better than that of H1.”

Both the agencies maintained its full fiscal forecast at 4.8 percent (Crisil’s) and 4.9 percent (India Ratings), both marginally lower than the government estimate of around 5 per cent.

While manufacturing rose 1 per cent during the September quarter, agriculture output soared 4.6 percent.

Exports during the quarter grew a robust 16.3 per cent on the back of rising global demand and fall in rupee.

Also, investment activity measured by gross fixed capital formation picked up in the second quarter and grew by 2.6 per cent against a deceleration of 1.2 per cent in the preceding quarter.

“This change in the investment growth trajectory is the most important take away from the second quarter GDP data.

Although it is too early to rejoice on this account, the passage of some crucial economic bills by Parliament coupled with clearing of some mega projects by the Cabinet Committee on Investment appears to be finally paving way for an investment revival,” India Ratings concluded.

PTI