6% GDP growth in H2FY17, optimistic for FY18
Macquarie The decline in gross domestic product (GDP) for the second half of the year is likely to be more stark than government estimates, says Tanvee Gupta Jain, India Economist Research at Macquarie Capital Securities. Tanvee Gupta Jain (more) Economist, Macquarie | Error loading player: No playable sources found The decline in gross domestic product (GDP) for the second half of the year is likely to be more stark than government estimates, says Tanvee Gupta Jain, India Economist Research at Macquarie Capital Securities.
Macquarie estimates 6 percent growth against the 6.7 percent estimate by the CSO for the second half of the current financial year. The advance estimate for GDP for the fiscal year 2017 released on Friday shows India's growth is set to slow down to 7.1 percent in this financial year but this does not include the impact of demonetisation. Keeping in mind the uncertainty due to the cash crunch, Macquarie's gross value added (GVA) estimate for the current year is 6.6 percent and for GDP is 6.8 percent at market price. Macquarie is optimistic for financial year 2018 and estimates GVA at 7.4 percent and GDP at 7.5 percent.
Tanvee says growth will move up and consumption expenditure is likely to bounce back on account of pay commission impact on state governments and pick up in rural consumption with increasing minimum support price (MSP) prices and wages. However, investment will be down and recovery will be pushed to FY19. Below is the verbatim transcript of Tanvee Gupta Jain's interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on Sonia: What did you make? Are you concerned about the GDP estimates that have come in at 7.1 percent for FY17? A: I would say on the CSO advance estimate, we have already been built in that they won't be incorporating the demonetisation impact at least that was the leading news which we were getting. If you look at the numbers, they are coming in at 7.1 percent using first seven months of data, if you compare it but our numbers - we are at 6.8 percent for GDP at market price and 6.6 percent for GVA basis.
I guess the better way to look at it is to wait for some more data points especially the growth of the listed companies or the second advance estimates of agriculture sector plus they have not incorporated the abnormality that we are seeing under credit and the deposit side post demonetisation. So I guess going forward, these are the three indicators, which we will be tracking besides high frequency indicators. Latha: So what are you saying that without that -- at the moment you are working with 6.6, that is your best guess for the current year? A: Yes, that is our best guess for the current year. There is a lot of uncertainty regarding the exact impact of demonetisation but looking at the most macro indicators and estimates of the same, the best guess on GVA basis is 6.6 percent for the full year. If you look at the growth for the average growth that CSA is estimating for the second half is 6.7. We are at 6 percent versus what the minister of statistics is estimating. Latha: What about FY18? A: FY18, we are pretty optimistic. We are saying growth is likely to bounce back. We are at 7.4 percent on GVA basis, it is 7.5 percent on GDP at market price. Sonia: Any sectoral trend that you are noticing either in terms of agri, mining, any further deterioration that you are expecting going ahead? A: If you look at the breakup largely our view remains the same. We are expecting that the growth recovery will continue in FY18 itself. So what will happen is that the consumption expenditure is likely to move up or bounce back on two things -- one the
Pay Commission impact now on the state governments will start coming in because lot of states will start announcing a pay increase for their employees and at the same time, our view is that the rural consumption will pick up because of the agricultural growth as well as the high MSP prices plus rural wage growth that we are already seeing going up. The rabi sowing looks pretty decent. So our view is that the consumption is going to move up but the investments especially the private corporate capex -- now the recovery is likely to get pushed forward to FY19. So our view is that the consumption up, investment down.
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Macquarie The decline in gross domestic product (GDP) for the second half of the year is likely to be more stark than government estimates, says Tanvee Gupta Jain, India Economist Research at Macquarie Capital Securities. Tanvee Gupta Jain (more) Economist, Macquarie | Error loading player: No playable sources found The decline in gross domestic product (GDP) for the second half of the year is likely to be more stark than government estimates, says Tanvee Gupta Jain, India Economist Research at Macquarie Capital Securities.
Macquarie estimates 6 percent growth against the 6.7 percent estimate by the CSO for the second half of the current financial year. The advance estimate for GDP for the fiscal year 2017 released on Friday shows India's growth is set to slow down to 7.1 percent in this financial year but this does not include the impact of demonetisation. Keeping in mind the uncertainty due to the cash crunch, Macquarie's gross value added (GVA) estimate for the current year is 6.6 percent and for GDP is 6.8 percent at market price. Macquarie is optimistic for financial year 2018 and estimates GVA at 7.4 percent and GDP at 7.5 percent.
Tanvee says growth will move up and consumption expenditure is likely to bounce back on account of pay commission impact on state governments and pick up in rural consumption with increasing minimum support price (MSP) prices and wages. However, investment will be down and recovery will be pushed to FY19. Below is the verbatim transcript of Tanvee Gupta Jain's interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on Sonia: What did you make? Are you concerned about the GDP estimates that have come in at 7.1 percent for FY17? A: I would say on the CSO advance estimate, we have already been built in that they won't be incorporating the demonetisation impact at least that was the leading news which we were getting. If you look at the numbers, they are coming in at 7.1 percent using first seven months of data, if you compare it but our numbers - we are at 6.8 percent for GDP at market price and 6.6 percent for GVA basis.
I guess the better way to look at it is to wait for some more data points especially the growth of the listed companies or the second advance estimates of agriculture sector plus they have not incorporated the abnormality that we are seeing under credit and the deposit side post demonetisation. So I guess going forward, these are the three indicators, which we will be tracking besides high frequency indicators. Latha: So what are you saying that without that -- at the moment you are working with 6.6, that is your best guess for the current year? A: Yes, that is our best guess for the current year. There is a lot of uncertainty regarding the exact impact of demonetisation but looking at the most macro indicators and estimates of the same, the best guess on GVA basis is 6.6 percent for the full year. If you look at the growth for the average growth that CSA is estimating for the second half is 6.7. We are at 6 percent versus what the minister of statistics is estimating. Latha: What about FY18? A: FY18, we are pretty optimistic. We are saying growth is likely to bounce back. We are at 7.4 percent on GVA basis, it is 7.5 percent on GDP at market price. Sonia: Any sectoral trend that you are noticing either in terms of agri, mining, any further deterioration that you are expecting going ahead? A: If you look at the breakup largely our view remains the same. We are expecting that the growth recovery will continue in FY18 itself. So what will happen is that the consumption expenditure is likely to move up or bounce back on two things -- one the
Pay Commission impact now on the state governments will start coming in because lot of states will start announcing a pay increase for their employees and at the same time, our view is that the rural consumption will pick up because of the agricultural growth as well as the high MSP prices plus rural wage growth that we are already seeing going up. The rabi sowing looks pretty decent. So our view is that the consumption is going to move up but the investments especially the private corporate capex -- now the recovery is likely to get pushed forward to FY19. So our view is that the consumption up, investment down.
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