ZyFin pegs India's Q2 GDP growth at 4.7%

[sree45]

India's economy would expand by 4.7 per cent in the second quarter of the current financial year, according to research and analytical firm ZyFin. This is less than the finance ministry’s estimate of 5-5.5 per cent. The official GDP data is slated to be released next week.

On its methodology, ZyFin said it uses variables which are lead indicators to the official data.

In the first quarter of the current financial year, GDP expanded at a four-year bottom of 4.4 per cent. At that time, ZyFin had estimated a growth of 4.5 per cent.

"We still believe that the economy is in a crisis mode and much below what the economy used to grow at a pace of around 8 per cent,” Debopam Chaudhuri, vice-president (research and development) at Zyfin, told Business Standard.

Even if the economy grows at this pace, it would be at a year-high. In the second quarter of 2012-13, the economic growth was higher at 5.2 per cent according to official estimates; by ZyFin's calculations, it was 5.1 per cent.

"While the estimates indicate a sluggish recovery, high inflation, weak consumer sentiment and a slowing services sector will constrain any sustained recovery,” the firm noted.

In the past few months, inflation has remained at a level above the comfort zone of the Reserve Bank of India (RBI). Wholesale price index (WPI) inflation stood at six per cent in between March and October this year against 4.6 per cent in the year-ago period.

The official GDP numbers will be released by the Central Statistics Office (CSO) on 29 November. The economy grew at a decade-low of five per cent in 2012-13 and general consensus among economists and various multi-lateral agencies is that the economy will grow sub-five per cent level this year.

"A turnaround from the second half of the year depends a lot on how the US goes about with the Quantitative Easing tapering as nothing major seems to be happening in the economy,” said Chaudhuri.

The most disappointing aspect of these numbers was that of the services sector, which occupies the largest share in the GDP. The sector grew at a five-year low of five per cent in the April-September period. In the previous quarter, according to official estimates, the services sector growth slowed to 6.2 per cent and Zyfin had estimated 5.6 per cent expansion in the sector.

According to ZyFin, manufacturing sector, which contracted by 1.2 per cent in April-June 2013, grew 2.1 per cent in the second quarter.

Chaudhari said the only silver lining was the farm sector , whose output rose by 3.9 per cent in the second quarter. This is the highest since the third quarter of 2011-12 when agricultural sector rose 4.1 per cent.

However, Chaudhari does not buy the government's argument that agriculture will lift the economy in 2013-14. "For that to happen, a lot of policy changes need to take place to ensure that agriculture's contribution to GDP is prominent.”

Zyfin's estimates are based on various set of variables such as excise duty collections, cement production, rainfall measurement, etc.

ZyFin pegs India's Q2 GDP growth at 4.7% | Business Standard

 

[Chinese-Dragon]

China had an average sustained growth rate of 10-12% for three whole decades. That is 30 years.

Yet we are STILL a developing country. That's what you get for having a population above 1+ billion, even double-digit growth for three decades in a row was not enough.

Now what do you think will happen with a 4-5% growth rate? In compound interest, small changes in growth rate mean a lot.

Take out a calculator, and see what $1.5 trillion will become after 20 years of 5% growth. You will be incredibly disappointed.

 

[UKBengali]

China had an average sustained growth rate of 10-12% for three whole decades. That is 30 years.

Yet we are STILL a developing country. That's what you get for having a population above 1+ billion, even double-digit growth for three decades in a row was not enough.

Now what do you think will happen with a 4-5% growth rate? In compound interest, small changes in growth rate mean a lot.

Take out a calculator, and see what $1.5 trillion will become after 20 years of 5% growth. You will be incredibly disappointed.

Also China was pretty much one of the poorest countries in the world in 1980 in GDP/capita - around the same level as BD and behind both India and Pakistan.

Can any Indians with knowledge of the Indian economy explain what they think will happen over the next 5 years as regards GDP/growth and why?

 

[farhan_9909]

so below 5% this year again?

or somewhere closer to 4%?

 

[AnnoyingOrange]

Apna dekho miyaan...

4% of 1.8 trillion USD is twice your entire GDP.

 

[Chinese-Dragon]

Apna dekho miyaan...

4% of 1.8 trillion USD is twice your entire GDP.

What kind of math is that?

 

[wiqi21]

What kind of math is that?

Endian

 

[AirRodgers]

Apna dekho miyaan...

4% of 1.8 trillion USD is twice your entire GDP.

.04x$1.8 trillion=$72 billion

Pakistan 2012 GDP is $231.2 billion

What math are you using that $72 billion is twice as much as $231.2 billion.

 

[truthseeker2010]

better question would have been where do we stand?

 

[by78]

4.7% is rather generous. OECD pegged is at a mere 3.4%. With inflation remains elevated, India is in effect regressing.

Indian economy to grow 3.4% in FY14: OECD | Business Standard

Indian economy to grow 3.4% in FY14: OECD
The Indian economy is expected to improve marginally in the current financial year, with gross domestic product (GDP) at market prices projected to expand by 3.4 per cent, from 3.3 per cent in the previous financial year, the Organisation for Economic Co-operation and Development (OECD) said on Tuesday.

"The country's economic activity is expected to recover gradually as the rupee depreciation supports exports, infrastructure projects cleared by the Cabinet Committee on Investment come on stream and political uncertainty declines after the general election due in 2014," OECD said.

Paris-based OECD, a grouping of mostly developed nations, has pegged India's GDP growth at market prices to be 5.1 per cent in 2014-15 and rise to 5.7 per cent in 2015-16.

India calculates GDP at constant prices which grew at five per cent in financial year 2012-13, the lowest in a decade. In the current financial year ending March 2014, Finance Minister P Chidambaram expects the economy to grow by five-5.5 per cent.

According to OECD, the rupee depreciation is putting pressures on inflation, public finances, companies and banks with high external debt.

"Supply constraints will continue to restrain growth, adding to inflationary pressures and the current account deficit," it added.

Meanwhile, OECD welcomed India's new monetary policy framework that puts more weight on inflation as a policy anchor. However, it said containing inflation pressures also requires reducing the fiscal deficit and dealing with supply constraints that limit growth. "The new Land Acquisition Law may promote investment, but the new Food Act will be fiscally costly... Priority should now be given to cutting energy subsidies, better targeting household transfers, implementing pending tax reforms, improving infrastructure and reforming the labour market," it said.

OECD projects world economy to grow 2.7 per cent this year before accelerating to 3.6 per cent in 2014.

 

[by78]

Bump.