See FY16 GDP growth at 7.5%, FY17 at 8%: Barclays

Broadly growth recovery is on track, but there won't be a spike up soon and the upticks will be uneven, says Siddhartha Sanyal, chief India economist at Barclays.

He expects the economy to grow at 7.5 percent in FY16 and 8 percent in FY17.

On the Reserve Bank's fifth bi-monthly policy, he says the statement was balanced. "In fact, it was slightly more softer than expected. The RBI reiterated that it wants to stay data dependent and is not averse to the idea of lowering rates further," he told CNBC-TV18.

Going ahead, Sanyal sees two 25 basis points rate cuts in the first half of 2016. He expects the first rate cut to be in April, post the Budget.Below is the verbatim transcript of Siddhartha Sanyal’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18.Ekta: First wanted to start by asking you about growth. We have Q2 gross domestic product (GDP) which came in largely inline but better than the previous quarter at 7.4 percent. Right after that we had the auto sales which were completely disappointing this time around for the month of November. We had the manufacturing purchasing managers' index (PMI) which came in at a 25 month low and this morning we had the services PMI which came in at a five month low for the month of November. What is high frequency data indicating to you in terms of growth right now?A: That is a very interesting question, basically what is happening here is, we think broadly growth recovery stays on track but we need to be careful about two factors. It is not going to be any big spike up anytime soon, it is possibly going to be very gradual process number one. We have to live with a bit of uneven upticks. It might be from quarter-to-quarter even upticks, from sector-to-sector occasionally. For example, at the moment we are seeing urban growth is doing relatively better. However, we are not at the moment that confident or we are not seeing that kind of an uptick in case of rural growth.On the other hand, if you look at the capital expenditure (capex) cycle, the government spending again which also had been somewhat volatile over the course of the last few months but by and large they tried to support the capex part and spend a bit of money on certain projects – roads, highways, etc being on the forefront. However, at the same time private capex still remains pretty weak and might stay weak for a while. So, as a whole it is a bit of an uneven uptick and it has to be a gradual uptick. We see growth moving from 7.3 percent in the previous financial year going to around 7.50 percent in this financial year but eventually towards 8 percent in FY17.Anuj: The other talking point  of course was the Reserve Bank of India (RBI) monetary policy and the statements from the Governor. What did you make of that and what is your call now in terms of any more incremental rate cuts which are still left in the system?A: The statement this time was a very balanced one. There was no rate action as expected and we were expecting a balanced statement so it went perfectly inline with that expectation. If at all, I would say the statement this time was slightly more softer than what we had expected. So, basically what is happening here is RBI policy as a Governor reiterated in the statement as well as in subsequent interactions that they want to stay data dependant and as numbers pan out if they are favourable they are not averse to the idea of offering more easing. So, it is some kind of an accommodative stance with a strong vigil on the inflation scenario.Our sense is that inflation will not really trouble us much in the near future. We see numbers which is the consumer price index (CPI) print which is today at around 5 percent going to about Rs 5.50 percent by the end of the financial year and broadly hovering in the 5-5.50 percent range in the near future.So, if I see that kind of a scenario and as we discussed earlier that growth uptick still remains uneven and at a very gradual pace, I think there is still room for little more easing on the part of RBI. We factor in about 50 basis points that is 225 basis points rate cuts in the first half of calendar year 2016. Ekta: So would one of them be pre or post Budget?A: Our base line scenario as of now post Budget both of them so we are expecting one in early April to start with. However, everything remains as the RBI has also reiterated their stance remains very data dependant. If incremental data points suggests there is more easing on inflation, I am not necessarily talking about the backward looking prints but generally the touch and feel of the economy that whether incrementally going ahead forward looking inflationary pressures are relatively less that might open up space for RBI somewhat earlier. However, as of now, our base line scenario is to expect the first cut in early April.