GDP growth in June quarter to be around 6.6% in India: Nomura

NEW DELHI: India's GDP growth is likely to be higher at 6.6 per cent in the June quarter from the previous three months this year even as the pick-up in growth numbers in India has lost some momentum on account of GST, says a report.

According to Japanese financial services major Nomura, the pick-up in growth which was visible toward end-of March quarter had lost some momentum towards end of the June quarter due to destocking and uncertainty ahead of the Goods and Services tax (GST).

"Despite some loss of momentum, we expect average GDP growth in Q2 (April-June) to be modestly higher at 6.6 per cent y-o-y from 6.1 per cent in Q1 (January-March)," Nomura said in a research note.

It further noted that in the second half (H2) of 2017, growth recovery is expected to accelerate to 7.4 per cent led by a resumption of production after GST, ongoing remonetisation, normal monsoons and lower lending rates.

The pick-up in growth numbers in the second half is likely to be led by a resumption of production (after GST), ongoing re-monetisation, stronger rural consumption buoyed by normal monsoons and easier financial conditions (lower lending rates, liquidity).

"Pay hikes for state government employees and a pick-up in external demand could be an added tailwind," it added.

India lost the tag of the fastest growing economy to China in the March quarter with a GDP growth of 6.1 per cent, which pulled down the 2016-17 expansion to 7.1 per cent.

"Excluding the GST, indicators of consumption appear to have stabilised while those for services continue to signal an improving outlook," Nomura added.