India's GDP growth likely to be 7.1% in 2017-18: Nomura

15 Sep '17

2 min read

Following a likely rise in industrial production in near future, India’s GDP growth is projected to be around 7.1 per cent this fiscal, says a recent report by Japanese financial services major Nomura. The rise is anticipated as firms resort to ‘restocking’ after implementation of goods and services tax (GST), especially ahead of the festive season, it says.

Nomura expects a GDP growth of 7.1 per cent year-on-year and gross value added (GVA) growth of 6.7 per cent in fiscal 2017-18.

Businesses went on a destocking spree before GST, primarily because of a steep fall in demand from consumers, who delayed buying. Economic recovery will likely continue to be led by consumption, according to a news agency that quoted the Nomura report.

The report foresees a positive impact of the ongoing remonetisation initiative on the cash-intensive services sectors, which will help raise growth numbers.

India’s index of industrial production (IIP) during July slipped to 1.2 per cent because of a poor show by the manufacturing sector, while retail inflation rose to a 5-month high of 3.36 per cent in August due to a rise vegetable and fruit prices, according to Central Statistics Office (CSO) data.

The data suggest that the industrial growth recovery is still uneven with weak investment demand, but also currently depressed due to GST effects, the Nomura report said commenting on the CSO statistics. While demand-side price pressures remain contained, supply side and statistical factors, such as GST and food prices are driving inflation higher, it added. (DS)

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