These sectors set to boost India’s GDP numbers past 7% in Q4FY18
India's GDP has reached a 1-year high. The last time, the economy stood near 7% mark, it was in the corresponding period of the previous year.
The Central Statistics Offices (CSO) will be presenting India’s Gross Domestic Product (GDP) numbers for the fourth quarter ended March 2018 (Q4FY18). It needs to be noted for entire FY18, the GDP growth is expected below 7% by analysts even including CSO and Economic Survey 2018. India's Gross Domestic Product (GDP) came in at 7.2% in third quarter October - December 2017 (Q3FY18) - higher compared to 6.3% in Q2FY18 and 5.7%. India's GDP has reached to one-year high, as the last time, the economy stood near 7% mark, was in the corresponding period of the previous year.
Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India said, “GDP growth for Q4 and FY18 is likely to spring a positive surprise. We expect GDP growth for Q4FY18 would be around 7.6% and subsequently the FY18 growth would be at 6.7%.” Let’s have a look at how those sectors that may boost India’s GDP past 7%.
As per SBI, the Manufacturing GVA in Q4 is expected to log 9.0% growth due to smart growth in Corporate GVA (defined as sum of PBIDT and Wages/Salaries) as both of these are strongly positively correlated.
ICICI Bank said, “ Growth for core infrastructure industries in Q4 FY2018 has picked up on a Y-o-Y basis, signaling a rise in industrial demand.”
Capital goods have grown at a robust ~10% YoY in Q4 FY2018, as compared to an anaemic ~2% YoY rise in Q4 last year, and ~7% YoY in Q3 FY2018, showing further industrial traction.
Construction sector growth will do well as cement and steel consumption seems to have picked up smartly, added SBI.
Ghosh added, “We believe Service sector growth will hold up. In particular, Trade, Transport sub-segment will be helped by the sale of commercial vehicles jumping by 16%. Finance sub segment will do well because of a modest pick up in real estate. However, Public Administration sub segment will post a lower growth because of compression of Government expenditure in Q4.”
Meanwhile, agriculture sector will post a growth rate in excess of CSO projections with a better foodgrain production estimates.
"The significant shortfall in wheat production, which was seen till late in the sowing cycle, seems to have been alleviated, with production at 101% of target. Despite lower kharif production this year (2017 crop season), growth in agricultural value addition has been strong mainly due to healthy growth in non-crop sectors of forestry and fishing," Dasgupta.
Therefore, GDP growth is expected to clock 7.1-7.2% YoY in Q4 FY2018 (~6.4% YoY in 9M FY2018).
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Dasgupta added, “Overall, we expect GDP growth to have clocked a healthy ~6.6% YoY in FY2018. Growth is expected to show a sharp fillip to ~7.5% YoY in FY2019 supported by fading of GST-related disruptions, renewed buildup of supply chains, improved rural consumption demand on the back of rising rural wages, shored up fiscal support and better export performance.”