GDP growth in the second quarter is expected to slow to 7.5-7.6% – Report

NEW DELHI: GDP growth in September is expected to slow to 7.5-7.6% from the previous quarter, mainly due to slowing rural demand, said Monday a SBI research report.

GDP growth at constant prices (2011-2012) was 8.2% for the quarter from April to June 2018-2019.

The Central Bureau of Statistics will publish estimates of GDP growth for July-September on Friday.

The "SBI Ecowrap" report indicates that the SBI composite leading indicator, a basket of 21 leading indicators for the September quarter of the current fiscal year, shows a marginal downward trend.

As a result, growth in gross value added (GVA) in the second quarter could be 7.3 to 7.4 percent, due to slowing rural demand, the report says.

"We also believe that the growth figures for the second quarter will be facilitated by the weakness of the base in September 2017-2018.

"We estimate that the baseline impact on second quarter GVA growth is about 30 basis points.On the basis of tax collections, we expect thereafter second-quarter GDP growth in the range of 7.5 to 7.6%, "said Ecowrap.

He added that commercial vehicle sales, domestic pbadenger traffic and cement production have maintained double-digit growth over the past quarter. All of these indicators drove the VAB forward during the quarter.

Monthly data for various indicators for October 2018 suggest, however, that VAB growth is slowing due to lower demand, the report says.

"It is particularly worrying that non-food credit, bank deposits and sales of pbadenger vehicles and commercial vehicles have slowed compared to the previous month," he said.

Moreover, with the slowdown in public spending in the second quarter, fiscal impulses for growth would be clearly absent, the report added.