Growth recovery in Q2, says Rajiv Kumar
NEW DELHI: Niti Aayog’s new vice chairman Rajiv Kumar expects the economy to bounce back to grow at 7-7.5% in the September quarter even as the economy decelerated to its lowest level in three years in the June quarter.
Data released by the statistics department showed the economy decelerated to 5.7% in the first quarter of 2017-18 from 6.1% in the March quarter of 2016-17 as companies drastically reduced production to replenish existing stocks ahead of implementation of the Goods and Services Tax starting July 1.
Kumar, who took charge on Friday after economist Arvind Panagariya abruptly vacated the post to go back to teach at Columbia University, said active destocking of goods in anticipation of GST roll out and the base effect of high manufacturing growth rate in the April-June period of 2016 contributed to slower GDP growth in June quarter of 2017-18.
Kumar has earlier worked as the chief executive of Delhi-based think-tank ICRIER and secretary general of industry lobby group Federation of Indian Chamber of Commerce and Industry (FICCI).
“June quarterly data is only a blip and does not show any trend. In the July-September quarter, growth rate should be at least 7-7.5% as there is clarity on GDP, restocking of inventory by traders is on and monsoon has been good,” he added.
He said it is better for Niti Aayog to put out its own forecasts through an economic growth forecasting unit rather than relying on estimates by other organisations.
After the first quarter GDP estimate was released, most economists have said they would revised their annual growth projection for 2017-18 to around 7%.
Madan Sabnavis, chief economist at Care Ratings Ltd said that the rating agency expects a 7.1% growth for 2017-18, down from its earlier estimate of 7.6% post first quarter results.
Credit rating agency Crisil Ltd in a note said in an environment of subdued global growth and week investments, India’s GDP cannot grow fast in the short run. “For fiscal 2018 as a whole, we are in the process of revising down of our GDP growth forecast down from 7.4% stated earlier. That said, normal monsoon, softer interest rates and inflation, and pent-up demand will support consumption growth in the remaining quarters. There will also be a mild push to consumption from budgetary announcements,” it added.