India's economic expansion may have gained speed last quarter as manufacturing and services output improved even as weak rains hurt agriculture, economists said.
Gross domestic product in the three months ended Sept. 30 rose 7.4 percent from a year earlier, according to the median estimate in a poll of 14 economists by The Wall Street Journal. That is a step up from the 7.0 percent expansion in the preceding quarter.
The government is scheduled to issue the data on Monday.
"India's GDP growth is expected to have improved as industry clocked the highest output gains in over four years, while services remained resilient," said Mr. Sujit Kumar, an economist at Union Bank of India.
Industrial production data that were released earlier show output of manufacturing, mining and utilities firms rose 4.7 percent from the previous year during the quarter. That is a modest pickup from the 3.2 percent increase in the previous quarter and the strongest pace of expansion since the three months ended June 2011.
Still, the country received 15 percent less than the average level of rainfall during the June to September monsoon season the second successive year of shortfall. That is expected to weigh on farm production.
Some economists believe the weakness in the agricultural sector could more than offset the better performance of other sectors. A sustained decline in India's exports, which have been falling for almost a year now, also are expected to weigh on the economy.
Most economists predict Asia's third-largest economy will grow about 7.5 percent this year, helped by policy measures aimed at improving business conditions in Asia's third-largest economy.
In September, the Reserve Bank of India lowered its growth forecast to 7.4 percent from 7.6 percent, despite the four rate cuts it has delivered this year to stimulate investment. A further cut by the RBI, which will next review policy on Tuesday, isn't widely expected until next year.
"The RBI lowered its growth projection citing global headwinds, weak rains and sluggish private sector investment activity," Ms. Radhika Rao, India economist at DBS, said in a research note. "We expect these factors to also influence Monday's GDP numbers, but firm discretionary spending will pick part of the slack."
The spotlight will now be on the winter session of Parliament that started this week. Investors are hoping the government will be able to reach a consensus with opposition parties to help push through changes that will help growth, particularly one to enable the implementation of a nationwide uniform tax on goods and services.
"If some important bills get passed, then it will be positive for investor and business sentiment," said Mr. Saugata Bhattacharya, chief economist at Axis Bank. "That would translate to increased economic activity."
(Source – Market Watch, 27-November-2015)
Gross domestic product in the three months ended Sept. 30 rose 7.4 percent from a year earlier, according to the median estimate in a poll of 14 economists by The Wall Street Journal. That is a step up from the 7.0 percent expansion in the preceding quarter.
The government is scheduled to issue the data on Monday.
"India's GDP growth is expected to have improved as industry clocked the highest output gains in over four years, while services remained resilient," said Mr. Sujit Kumar, an economist at Union Bank of India.
Industrial production data that were released earlier show output of manufacturing, mining and utilities firms rose 4.7 percent from the previous year during the quarter. That is a modest pickup from the 3.2 percent increase in the previous quarter and the strongest pace of expansion since the three months ended June 2011.
Still, the country received 15 percent less than the average level of rainfall during the June to September monsoon season the second successive year of shortfall. That is expected to weigh on farm production.
Some economists believe the weakness in the agricultural sector could more than offset the better performance of other sectors. A sustained decline in India's exports, which have been falling for almost a year now, also are expected to weigh on the economy.
Most economists predict Asia's third-largest economy will grow about 7.5 percent this year, helped by policy measures aimed at improving business conditions in Asia's third-largest economy.
In September, the Reserve Bank of India lowered its growth forecast to 7.4 percent from 7.6 percent, despite the four rate cuts it has delivered this year to stimulate investment. A further cut by the RBI, which will next review policy on Tuesday, isn't widely expected until next year.
"The RBI lowered its growth projection citing global headwinds, weak rains and sluggish private sector investment activity," Ms. Radhika Rao, India economist at DBS, said in a research note. "We expect these factors to also influence Monday's GDP numbers, but firm discretionary spending will pick part of the slack."
The spotlight will now be on the winter session of Parliament that started this week. Investors are hoping the government will be able to reach a consensus with opposition parties to help push through changes that will help growth, particularly one to enable the implementation of a nationwide uniform tax on goods and services.
"If some important bills get passed, then it will be positive for investor and business sentiment," said Mr. Saugata Bhattacharya, chief economist at Axis Bank. "That would translate to increased economic activity."
(Source – Market Watch, 27-November-2015)
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