GDP Growth Likely To Pick Up Amid “Modest Agriculture Recovery”, Says Report

GDP Growth Likely To Pick Up Amid 'Modest Agriculture Recovery': Report

India lost its position as the world’s fastest-growing major economy last year

Days after the government said -green shoots- are visible in the economy, official data on GDP or gross domestic product for the third quarter of current financial year will be released at 5:30 pm today. Many economists expect the annual GDP growth to pick up to 4.7 per cent in October-December from 4.5 per cent in the previous quarter, when it appears to have bottomed out. Today’s data is the first since the Union Budget, which some say appears to support the economy in the long term but may not be enough to give it an immediate boost.

Here are 10 things to know:

  1. According to a poll conducted by news agency Reuters, the annual gross domestic product growth likely rose to 4.7 per cent in October-December from 4.5 per cent in the previous quarter. About 90 per cent of economists in the poll forecast growth for the October-December quarter at 5 per cent or below.

  2. The government has pegged economic growth at 5 per cent for the financial year ending in March this year. If that forecast comes true, it would mean the slowest annual pace of expansion for the economy since the 2008-09 global financial crisis.

  3. “A modest recovery in the agriculture sector, coupled with a normalisation in weather conditions amid elevated government spending likely pushed growth higher,” Barclays economists said in their latest weekly report.

  4. The government has said that with a 16-point focus, the Union Budget addresses “any kind of rural distress” in the economy. The Budget has laid the foundation for driving consumption and strengthening infrastructure for achieving the government’s target of making India a $5-trillion economy, Finance Minister Nirmala Sitharaman said this month.

  5. The Finance Minister has also said some signs of green shoots are visible in the economy but analysts remain doubtful. On a slightly longer time horizon, 42 economists polled in a wider Reuters poll last month expected growth to pick up in the next six months.

  6. Some economists say monetary policy should do most of the heavy lifting as the second Union Budget of Prime Minister Narendra Modi’s second term – which focuses on tax cuts and farm spending in an attempt to revive growth – may not be enough to kickstart the ailing economy.

  7. India lost its position as the world’s fastest-growing major economy last year. The government has set a target of making the country a $5-trillion economy by 2024.

  8. Nirmala Sitharaman has consistently said that the fundamentals remain strong and said she’s not closing the door on additional steps to support the economy.

  9. The Reserve Bank of India (RBI) kept the repo rate unchanged at 5.15 per cent after its scheduled bi-monthly monetary policy review this month in a bid to combat consumer inflation, which worsened to its highest level recorded in more than five years in December primarily driven by food prices.

  10. Last year, the RBI lowered the repo rate by a total 135 basis points – or 1.35 percentage point – in five out of six bi-monthly reviews. In February, the central bank projected a GDP growth rate of 6 per cent for the financial year starting April 1 while retaining the estimate for the current financial year at 5 per cent.

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