India Q4 GDP seen slowing to 6%: Standard Chartered

Standard Chartered expects India to report an annual growth rate of 6% in the March quarter from 6.1% in the previous quarter and below earlier expectations of an improvement to 6.5% or 7%.
Weak industrial output numbers, particularly the contraction in March, will have a bearing on GDP, given the weighting of about 20%.

A GDP slowdown to 6% will increase the urgency for authorities to act. The GDP data is due on May 31.

The RBI likely to cut the repo rate by 25 basis points to 7.75% at its June 18 review, comforted by core inflation below 5%.

OECD also cut India's growth forecast for 2012 by more than a percentage point to 7.1% from its November estimate of 8.2%, but said it could recover to 7.7% in the calendar year 2013, as reported. The forecast came a day after Morgan Stanley's assessment according to which India's growth could drop to 6.3% in 2012 and rise only to 6.8% the year after.

Despite a cut in the growth forecast, India is expected to do better than most countries, OECD added.

India's growth slowed to 6.1% during the third quarter ended December, the weakest pace in almost 3 years. Data for the January-March quarter will be released at the end of May.

The OECD said a cyclical upturn in investment, stronger external demand and a loose monetary policy will boost growth in the short term.

"A moderate cyclical pick-up in investment is projected in the near-term," it added. "Later this year and into the next, growth is set to pick up to around trend rates, supported by the delayed effects of the recent monetary policy easing."

OECD cautioned that there was limited room for more accommodative monetary stance due to inflation pressures and limited spare capacity, adding that India will have to prioritise fiscal consolidation efforts to sustain the growth momentum.

OECD is more optimistic about the country's long-term growth prospects, saying India could overtake China by 2020.

Last month, Standard and Poor's cut its outlook for India's credit rating to negative from stable, blaming high deficit and stalled reforms, as reported.