Services need to grow 7.8 per cent in order for India's GDP to expand by 5.3 per cent in the first quarter of this fiscal, the same as the previous quarter, assuming agriculture production rises by up to one per cent as most economists predict.
Industrial output figures are already out with factory production falling 0.1 per cent in the first quarter. The GDP figures for the first quarter of 2012-13 would be out tomorrow.
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Most economists pegged economic growth to fall below 5.3 per cent in April-June of 2012-13. Services (including construction) growth at 7.8 per cent might be difficult for the first quarter of this fiscal, considering that the tertiary sector has a high base of 8.9 per cent in the corresponding period of last fiscal. However, economists also do not believe that services growth would be very far off from 7.8 per cent. Services recorded a 7.5 per cent growth in the fourth quarter of 2011-12. Moreover, industry has a lag effect on services, and industrial growth has been dismal since the second quarter of 2011-12, when it expanded 2.79 per cent. Though services exports is very miniscule barometer of domestic services, the outbound shipment of tertiary sector contracted 2.8 per cent at $33.37 billion in the first quarter of this fiscal from $34.34 billion in the corresponding period of last fiscal. Anis Chakravarty, senior director, Deloitte pegged services growth between 7.5 to 8 per cent. He said even banking and financial services did not perform well. Chakravarty, however said he would be surprised if services growth fall to about 6.5 per cent. “I expect GDP growth for Q1 at around 5.1-5.2 per cent, with agriculture growth between 0.5 per cent to 1 per cent”, he said. If agriculture grows by 0.5 per cent in the first quarter, services will have to grow by around 8 per cent to achieve 5.3 per cent growth. The Prime Minister's Economic Advisory Council (PMEAC) projected agriculture growth at 0.5 per cent for the entire year 2012-13. CARE Ratings chief economist Madan Sabnavis, who pegged GDP growth for the first quarter at 5.2 per cent, said the first half does not see new supply in agriculture, but residual supply of rabi crops from the previous harvest months. He, was, however, optimist on services sector, saying the tertiary sector will grow by 8.3 per cent. Unlike Chakravarty, Sabnavis expected banking services to post good growth. “There was increased transportation in the post harvest time, which will add to the services sector, so services will grow about 8.3 per cent as the banking sector top line was good." India's GDP expanded 7.7 per cent in the first quarter of 2011-12, which is again a high base given the current context. However, there are optimistic views on first quarter growth as well. Dun and Bradstreet economist Arun Singh, projected the growth to be between 5.8-6 per cent. India's economic growth fell to nine-year low of 6.5 per cent in 2011-12. The Budget had assumed the economy to expand by 7.6 per cent for the current fiscal. However, this growth rate is not being talked of now. Prime Minister Manmohan Singh expected the economy to grow by more than 6.5 per cent for this fiscal. PMEAC pegged it at 6.5 per cent. The general feeling is that the economy would witness slow growth in the first half and then pick up pace in the second half due to results of policy action that the government is contemplating as well as low base of the last fiscal.
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Most economists pegged economic growth to fall below 5.3 per cent in April-June of 2012-13. Services (including construction) growth at 7.8 per cent might be difficult for the first quarter of this fiscal, considering that the tertiary sector has a high base of 8.9 per cent in the corresponding period of last fiscal. However, economists also do not believe that services growth would be very far off from 7.8 per cent. Services recorded a 7.5 per cent growth in the fourth quarter of 2011-12. Moreover, industry has a lag effect on services, and industrial growth has been dismal since the second quarter of 2011-12, when it expanded 2.79 per cent. Though services exports is very miniscule barometer of domestic services, the outbound shipment of tertiary sector contracted 2.8 per cent at $33.37 billion in the first quarter of this fiscal from $34.34 billion in the corresponding period of last fiscal. Anis Chakravarty, senior director, Deloitte pegged services growth between 7.5 to 8 per cent. He said even banking and financial services did not perform well. Chakravarty, however said he would be surprised if services growth fall to about 6.5 per cent. “I expect GDP growth for Q1 at around 5.1-5.2 per cent, with agriculture growth between 0.5 per cent to 1 per cent”, he said. If agriculture grows by 0.5 per cent in the first quarter, services will have to grow by around 8 per cent to achieve 5.3 per cent growth. The Prime Minister's Economic Advisory Council (PMEAC) projected agriculture growth at 0.5 per cent for the entire year 2012-13. CARE Ratings chief economist Madan Sabnavis, who pegged GDP growth for the first quarter at 5.2 per cent, said the first half does not see new supply in agriculture, but residual supply of rabi crops from the previous harvest months. He, was, however, optimist on services sector, saying the tertiary sector will grow by 8.3 per cent. Unlike Chakravarty, Sabnavis expected banking services to post good growth. “There was increased transportation in the post harvest time, which will add to the services sector, so services will grow about 8.3 per cent as the banking sector top line was good." India's GDP expanded 7.7 per cent in the first quarter of 2011-12, which is again a high base given the current context. However, there are optimistic views on first quarter growth as well. Dun and Bradstreet economist Arun Singh, projected the growth to be between 5.8-6 per cent. India's economic growth fell to nine-year low of 6.5 per cent in 2011-12. The Budget had assumed the economy to expand by 7.6 per cent for the current fiscal. However, this growth rate is not being talked of now. Prime Minister Manmohan Singh expected the economy to grow by more than 6.5 per cent for this fiscal. PMEAC pegged it at 6.5 per cent. The general feeling is that the economy would witness slow growth in the first half and then pick up pace in the second half due to results of policy action that the government is contemplating as well as low base of the last fiscal.
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