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India’s GVA growth likely to rise to 6.3 percent in September quarter: Nomura

Nomura’s proprietary indices suggest that growth bottomed out in the second quarter and a recovery is underway in the third quarter.

business Updated: Oct 22, 2017 11:45 IST
Press Trust of India, New Delhi
GVA growth,Nomura,September quarter
The July-September quarter saw strengthening of consumption-related indicators.(File)

The Indian economy is expected to see a rebound in the July-September quarter of this year with a GVA growth rate of 6.3%, says a Nomura report.

Nomura’s proprietary indices suggest that growth bottomed out in the second quarter and a recovery is underway in the third quarter, largely because consumption and investment indicators have improved in the third quarter.

“We expect GVA growth to rise to 6.3% year-on- year in the third quarter from 5.6% in the second quarter, largely in line with the Reserve Bank of India’s Q3 forecast of 6.4%,” Nomura said in a research note.

The July-September quarter saw strengthening of consumption-related indicators.

Rural consumption indicators such as tractor and two- wheeler sales picked up sharply ahead of the festive season, despite weak monsoon, likely reflecting improving cash levels with remonetisation.

Moreover, urban consumption indicators such as passenger vehicle sales and consumer credit also improved in the September quarter, relative to June quarter.

The Japanese financial services major, however, said the recovery in the country’s economic activity will not be linear and could consolidate before moving higher.

For this financial year Nomura expects a GVA growth of 6.4%, slightly lower than the RBI’s forecast of 6.7%, partly because we expect the government to cut spending due to fiscal constrains.

On the RBI’s monetary policy stance, the report said with incremental growth momentum headed higher, core inflation above 4% and fiscal risks on the horizon, we expect rates to stay unchanged in the base case (75% probability), including at the next policy review meeting on December 6.

Earlier this month, the Reserve Bank of India kept benchmark interest rate unchanged on fears of rising inflation while lowering growth forecast to 6.7% for the current fiscal.

It also raised its inflation forecast to a range of 4.2% to 4.6% during remainder of current fiscal as against 4-4.5% previously.

First Published: Oct 22, 2017 11:44 IST