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  Business   Economy  22 Nov 2017  Industrial growth to fuel rise in Q2 GDP

Industrial growth to fuel rise in Q2 GDP

THE ASIAN AGE.
Published : Nov 22, 2017, 2:44 am IST
Updated : Nov 22, 2017, 2:44 am IST

Icra expects real manufacturing GVA growth at 6.8 per cent.

This has been led by factors such as rising commodity prices, which helped boost the realisations in some sectors such as metals.
 This has been led by factors such as rising commodity prices, which helped boost the realisations in some sectors such as metals.

New Delhi: Rating agency Icra said on Tuesday that India’s GDP is expected to pick up in the second quarter led by industrial growth.

Icra said it expects the growth of the Indian gross value added (GVA) to record a sequential recovery to 6.3 per cent in second quarter FY18 from 5.6 per cent in  first quarter FY18, led by a broad-based pickup in industrial growth (to 5.8 per cent from 1.6 per cent). This even as the expansion of agriculture, forestry and fishing (to 2 per cent  from 2.3 per cent) and services (to 7.3 per cent from 8.7 per cent) is likely to display some moderation.

 

“The second quarter (Q2) of FY18 marked a period of adjustment for the economy, following the introduction of the GST regime. An improvement in corporate earnings, partly reflecting milder discounts and higher commodity prices, and a pickup in volume growth in the mining and electricity sectors, is expected to contribute to a sequential recovery in GVA growth in Q2, offsetting the impact of the moderation in growth of the Central government’s expenditure and a tepid kharif harvest of several crops,” said Aditi Nayar, principal economist, Icra.

“Manufacturing volume growth in Q2 was not as strong as we had initially expected on the basis of restocking after the GST. Subsequent to the discounts that had been offered in Q1 FY18, consumption demand was subdued in Q2, particularly for consumer durables, dampening overall volume growth. However, corporate results suggest a sequential recovery in earnings growth in that quarter,” she said.  

 

This has been led by factors such as rising commodity prices, which helped boost the realisations in some sectors such as metals.  

“Moreover, the widespread discounts offered in Q1 to clear stock prior to the transition to the GST, largely eased in Q2. Based on these factors, Icra expects real manufacturing GVA growth to improve substantially to  around 6.8 per cent in Q2 from the low 1.2 per cent in Q1,” she added.

The significant turnaround in the performance of the mining output, a favourable base effect, and supportive commodity prices, should boost the GVA growth of the mining and the quarrying sub-sector to a healthy 7.5 per cent in Q2 FY18, said Icra.

 

Tags: icra, india gdp