India's Q4FY12 GDP to be flat at 6.1%: CNBC-TV18 Poll

The Q4 FY12 GDP is expected to be flat at around 6.1% on a quarter-on-quarter (QoQ) basis, but on a year-on-year (YoY) basis, it is versus 7.8%. Majority of the economists have forecasted it to be between 6% and 6.2% , but only one forecast said it would be 6.6%.

Break of Q4 FY12 GDP on a QoQ basis:

Services sector growth is expected at 8.6% versus 8.9% QoQ. Industrial growth is expected at 1.9% versus 2.6% and agriculture sector growth is expected at 2.8% versus 2.7%. So, it would be more or less either a flattish or a negative growth.

The number is likely to disappoint indicating growth hasn’t bottomed out as yet. There was a sharp contraction on the index of industrial production (IIP) number, which was -3.5% in March futher reiterating this. IIP has a 20% contribution to the overall GDP and hence would have a significant bearing on the headline number.

Services sector accounts for a majority of around 58%. This is a key point to watch out for because it would reflect the kind of deceleration seen in the economy. Within services, consumption has been largely stable, last time  it was around 6.2% in Q3. If it drifts below 5% then it would be a key for worry, but is expected to be more or less stable. Within the industrial growth, construction could be slower than Q3, but it is likely to pull up industrial growth and also offset the mining growth.

Another key thing to watch out for is a gross fixed capital formation that contracted by 4% in Q2 and 1.4% in Q3. A positive number is not likely this time, but it is expected to be more or less flattish. It will be viewed positively because that implies investment has bottomed out.

What does this mean for the monetary policy?

Despite a slowing growth, most of the economists expect that Reserve Bank of India (RBI) will be on hold in June given the inflation pressure and the weak rupee. One more round of IIP and inflation is expected before the upcoming credit policy.

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