GDP - Improves, But Primarily Due to One Offs :: Edelweiss, link

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Real GDP grew better than expected 5.3% YoY in Q2FY15 (Edelweiss estimate: 4.9%) after expanding 5.7% in Q1FY15. While this is encouraging, it needs mentioning that activity was still supported by healthy agri growth (despite weak monsoon) and robust surge in government services. Private business cycle (GDP ex agri and government services) is still weak, as reflected in poor indirect tax collections so far. Manufacturing was particularly weak (as exports moderated) although services maintained pace, helped by improvement in trade services.

Going ahead, we expect agriculture growth to taper (weak kharif output) and government spending to slowdown (as government cuts expenditure to meet fiscal target). Meanwhile, domestic private sector will definitely see benefits flowing in from declining inflation and lower commodity prices, but we reiterate that private demand is still in the grip of a tight fiscal and monetary stance (businesses are facing high real lending rates). Therefore, for sustained uptick in private sector activity, monetary cycle needs to reverse, which we expect to start in early 2015. We maintain our FY15 and FY16 GDP growth forecast of 5.4% and 6.3%, respectively.

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https://www.edelweiss.in/research/GDP--Improves,-But-Primarily-Due-to-One-Offs/27731.html