The Indian economy grew at 7.2 percent in October-December 2017, and will likely expand 6.6 percent in 2017-18, latest official estimates said on Wednesday, amid strong revival signs in consumption spending and investment activity.
Sonal Varma of Nomura said the main takeaway from gross domestic product (GDP) numbers announced yesterday is that cyclical recovery is underway and sectors like trade, manufacturing, construction etc are showing pick-up.
However, although the investments have picked up, private consumption has gone down, said Varma.
Clearly the drags from demonetisation, goods and services tax (GST) seem to be fading but question marks with regards to sustainability of this cyclical recovery remains because the balancesheet issues are not yet over, she said.
The cyclical recovery could be underway for 2-3 quarters still, she added.
She said most numbers in the next six months will look good and so, for the H12018, the growth numbers could be above 7.5 percent. For the full calendar year 2018, growth is expected to be around 7.5 percent, said Varma.
For FY19, the GDP growth would be around 7.2 to 7.3 percent on an average, she said adding that in the first half of FY19 the growth would be faster but in second half some moderation is likely to kick in due to recent tightening of financial conditions.
Talking about interest rates by Reserve Bank of India (RBI), she said the risks are biased towards hike in interest rates on back of higher inflation, signs of cyclical recovery spreading.
For full interview, watch accompanying video...
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