Will stick to initial growth estimates: Axis Bank

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Commenting on RBI's stance going forward, Saugata Bhattacharya of Axis Bank says, "Being an economist I would still hedge my bets. We need a bit of a further drill down on the numbers where exactly in services say for instance these numbers have come in from. Look at disaggregated views of industry of services, of construction and so on how much of the number that we have seen would probably have defused from the government fiscal stimulus, how much of it is endogenous, how much of the government spending programmes are inbuilt into the system that is pay hike for instance, which has been attributed to be a major cause for car sale."

He says, "All of these factors will come in -- how does bank credit growth take off from a bank's perspective how would banks credit, how would capex and investment programmes of corporate begin to take off. So these are the multiple grades in that matrix that the RBI would probably have to judge rather than just these numbers itself. How is the external environment beginning to look as we have seen there has been a fairly sharp deterioration in the external global environment and that probably has implications for both in India's merchandised trade, India's services trade."

He believes these are the factors that have to be noted on to the decision matrix before RBI takes a call on whether they increase their tightening measures a bit more aggressively or maybe push that back a little bit inflation of course is yet another major aspect in this decision.
 
Bhattacharya says, "In the absence of any evidence to the contrary, we still would be relatively comfortable with this kind of growth number for final consumption expenditure. For one, you have been hearing anecdotal stories of increased consumption in retail mall for instance consumer durables even fast moving consumer goods (FMCG) is beginning to pick up."

He feels sense in sticking to his initial 8% growth estimates. "Even now the situation still looks too fluid, there are too many weaknesses in the system both in India and global. So, probably prudent to go with 8% now and revise it upwards."