Moody's cuts India's 2018 GDP growth forecast to 7.3% from 7.5%

Credit rating agency Moody's on Wednesday cut its forecast for India's GDP growth in 2018 to 7.3 percent from 7.5 percent earlier.

The government will release GDP data for the quarter ended March on Thursday at 05:30 pm. Economic Affairs Secretary Subhash Chandra Garg on Monday said it was expected that annual growth was between 7.3 and 7.5 percent in the March quarter.

India's GDP grew by 7.2 percent in the third quarter, which helped the country reclaim the title of fastest growing economy from China. China grew 6.8 percent in the quarter, the data showed.

India's economy probably gained a little momentum in the first three months of 2018 which should ensure that it remains the world’s fastest-growing major economy, a Reuters poll found.

Gross domestic product expanded an annual 7.3 percent in the first three months of 2018, the May 24-29 poll of 55 economists predicted, a touch faster than the 7.2 percent achieved in the last three months of 2017 — and well above China’s pace of 6.8 percent for the quarter ending in March. Forecasts ranged from 6.9 to 7.7 percent.

If the poll is right, January-March would have the fastest expansion since before the government’s surprise decision in November 2016 to scrap high-value currency notes and a botched implementation of a goods and services tax (GST) in July last year stalled growth.

GDP growth for the March quarter and FY18 is likely to spring a positive surprise. "We expect GDP growth for Q4FY18 would be around 7.6 percent and subsequently the FY18 growth would be at 6.7 percent," Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said in a note.

"We expect 9 percent growth in manufacturing GVA in Q4 due to smart growth in corporate GVA as both of these are strongly positively correlated," he said.

Corporate GVA, which has decelerated since the December quarter of FY17, rebounded in the September quarter of FY18 and exhibited positive growth of 16.1 percent in the March quarter this year. The agriculture sector will post a growth rate in excess of CSO projections, with better food grain production estimates. The service sector will continue to grow at over 8 percent.