New Delhi, Feb 27 (IANS) India’s third quarter 2019-20 GDP growth rate is expected to inch up on the back of rising inflation, along with a modest uptick in the momentum of services and industry.
Several economists polled by IANS said that GDP growth rate is seen in the range of 4.6-4.8 per cent for the third quarter from 4.5 per cent reported for the second quarter of the current fiscal.
Various indicators like air passenger traffic, railways’ freight revenue and commercial vehicles’ sales have shown improvement in Q3FY20 against weak performance in Q2FY20.
The macro-economic data point of the national income and the GDP will be released on Friday.
“We expect the GDP Q3 number to be 4.8 per cent. Since no major improvement was observed among leading indicators, market expectations remain subdued,” said Karan Mehrishi, Lead Economist at Acuite Ratings and Research.
“Generally, Q3 is one of the strongest quarters in a financial year because the inclusion of festive seasons sales and kharif harvest-driven rural consumption, this time, however, nothing noteworthy is foreseen.”
Besides, he pointed out that capacity utilisation levels have also fallen.
“Fresh capex looks unlikely and investments will be moderate driven by the public sector. We are however mindful of the inflation trajectory moving forward,” Mehrishi said.
India Ratings and Research gave a forecast of 4.7 per cent for Q3 GDP.
Edelweiss Securities’ Economist Madhavi Arora said: “We expect a marginal shallow pick up in 3Q, amid still-sluggish corporate earnings and weak industrial sector.”
“While government spending has been a respite for the services sector, its’ contribution to growth will also decline marginally. We expect 3Q GDP to print around 4.6-4.7 per cent.”
Meanwhile, ICRA expects the GDP and the gross value added (GVA) growth at basic prices to rise mildly to 4.7 per cent and 4.5 per cent, respectively, in Q3FY20, from 4.5 per cent and 4.3 per cent, respectively, in Q2FY20.
“Some industrial and service sectors displayed a pickup in YoY volume growth in Q3FY20 relative to the previous quarter, while the output of kharif crops displayed a mixed trend,” its principal economist Aditi Nayar said.
“Lower raw material costs, high growth of the government’s non-interest revenue expenditure and the stable profitability metrics revealed by the earnings of some banks would provide a cushion to the pace of economic growth,” she said.
However, the extent and duration of coronavirus outbreak would test the sustainability of the nascent upturn in growth in the ongoing quarter.