India’s gross domestic product (GDP) growth likely peaked in the first quarter of the current fiscal and as a weaker rupee and rising oil prices remain major drag factors for the economy, some moderation is expected later, Credit Suisse said in a research note. Monsoon deficit is 6 per cent and the acreage under kharif sowing is flat year-on-year, it said.
Kharif is the autumn crop sown at the beginning of the summer rains. Despite being ‘encouraging’, the 8.2 per cent GDP growth in April-June quarter was largely due to base effects, the global financial services company said.India's gross domestic product (GDP) growth likely peaked in the first quarter of the current fiscal and as a weaker rupee and rising oil prices remain major drag factors for the economy, some moderation is expected later, Credit Suisse said in a research note. Monsoon deficit is 6 per cent and the acreage under kharif sowing is flat year-on-year, it said.#
“These two headwinds could turn out to be a double whammy for India, exerting an upward pressure on inflation and downward pressure on growth,” a news agency quoted the research note as saying.
Despite headline inflation easing in recent months because of benign food inflation, the core inflation is inching up and all these factors could prompt the Reserve Bank of India (RBI) to raise interest rates once again by 25 bps–with a risk of a 50 bps hike–in the October policy meeting, according to the note.
Higher interest rates will have a negative impact on growth expectations as well.
Economic growth is expected to gradually get support from strengthening bank balance sheets as more companies exit bankruptcy, and as goods and services tax (GST) implementation progresses further, it added. (DS)
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