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Indian Economy GDP To Grow 7.1% In Q4 FY17: ICRA

ICRA has attributed this expansion to remonetisation. However, the pace of growth of GDP in Q4 FY2017 is expected to be inferior to Q4 FY2016.

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The gross domestic product (GDP) and gross value added (GVA) of Indian economy is likely to expand by 7.1 percent and 6.9 percent, respectively, on a year-on-year basis during fourth quarter of financial year (FY) 2017, according to Indian credit ratings agency (ICRA).

ICRA has attributed this expansion to remonetisation, informed the agency in a statement. However, the pace of growth of GDP and GVA in Q4 FY2017 is expected to be inferior to Q4 FY2016 (8.4 percent and 8.1 percent, respectively).

Aditi Nayar, Principal Economist, ICRA, said “Benefiting from the gradual remonetisation, GVA growth is likely to improve to 6.9 percent in Q4 FY2017 from the initial estimate of 6.6% for Q3 FY2017, while remaining weaker than the robust 8.1 percent in Q4 FY2016. Our forecast of a 6.9 percent GVA expansion in Q4 FY2017 builds in a healthy 8.8 percent YoY growth in services, and moderate rise of 5.4 percent and 4 percent, respectively, in industry and agriculture, forestry and fishing.”

Led by double-digit rise in air cargo traffic, bank deposits, corporate bonds, commercial paper and central government’s non-interest non-subsidy revenue expenditure, ICRA expects the services sector to record a robust growth of 8.8 percent in Q4 FY2017.

Given the sequential dip in commodity prices and an unfavourable base effect, ICRA expects mining and quarrying to record lower output growth of 5 percent, as against 7.7 percent indicated by the index of industrial production (IIP) for the quarter.

However, construction GVA will most probably post higher growth of 1 percent in Q4 FY2017 than 0.5 percent indicated by IIP.

Despite the unfavourable post-monsoon rainfall, the area sown under rabi crops rose by around 6% percent in FY2017 relative to the previous year. On the back of the healthy rabi outturn, ICRA expects agriculture, forestry and fishing to display a growth of 4 percent in Q4 FY2017.

“The new WPI and IIP data, could lead to revisions in GDP and GVA levels and growth rates from FY2013 onward, at constant prices. In particular, the FY2017 growth rates may differ materially from the second advance estimates released by the CSO in February 2017. Furthermore, some additional data on the impact of the note ban on the informal sectors may result in a sharper dip in growth in H2 FY2017, relative to the revised levels for H1 FY2017,” Nayar added.

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indian economy icra gross domestic product iip