Nomura has told in a recent report that India’s GDP growth will rise from 7.6% to 7.8% in the year 2016-17.GDP growth would be based on high discretionary demand driven by 7th pay commission.
- It will also be decided by factors like wage hike, low inflation, high corporate profitability, ongoing implementation of public capital expenditure (Capex) and an accommodative monetary policy stance
Flash points
- Industrial production declined to 2 % in November, however these are temporary and the under lying Industrial growth remains positive says Nomura
- The industrial production was slowed down due to Chennai flood and diwali holidays but in January the growth has picked up
- According to Nikkei India PMI Index, India’s manufacturing growth has remained unchanged in February at 1 from January reading, which was a four-month high
- This was the second consecutive monthly improvement in business conditions across the sector
- The report noted the gradual rise in growth numbers would be largely led by low commodity prices leading to high demand
- Normal monsoon in 2016 should also support rural demand
Nomura expects CPI inflation to average 4 per cent in 2016, versus 5.8 per cent earlier and CPI inflation to be stable at 5 per cent in 2016.RBI is likely to go for a 25 basis point repo rate cut to 6.50 per cent
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