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India’s GDP growth to hike by 7.8% in 2016-17: Nomura

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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

India’s GDP growth to hike by 7.8% in 2016-17

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