The News International Team
This might just be the Narendra Modi government’s first litmus test. Ahead of the release of the first quarter gross domestic product or GDP data on Friday, economists, brokerages and various experts are all trying to gauge where the actual print will lie.
A CNBC-TV18 poll estimates Q1 FY15 GDP growth to come in at 5.8 percent versus 4.7 percent year-on-year and 4.6 percent quarter-on-quarter, the highest in 10 quarters. The broad range for the Q1 GDP is 5.4-6 percent.
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According to the poll, agricultural growth is expected to come in at a meager 2.8 percent versus 4 percent YoY, while industrial growth is seen at 4.1 percent vs -0.9 percent YoY and services is expected to grow at a firm 6.91 percent vs 6.5 percent YoY. If industrial growth comes in at 4.1 percent, it’ll be the highest in nine quarters.
Services, with construction, carries the highest approximate weight in total GDP at 58-60 percent, followed by industry, minus construction, at 25-27 percent and finally agriculture at 15-17 percent.
The annual GDP FY15 estimate is expected at 5.5 percent versus 4.7 percent in the previous fiscal year. The full-year GDP range is 5.3-6 percent. The FY16 GDP is estimated to grow 6.4 percent and the range for the same is 5.8-6.8 percent. But there is a caveat to the full-year GDP estimate – if there is a fall in government spending, then it will lower overall growth in the second half of FY15.
The revival in the first quarter is expected to be led by industries. After a 0.2 percent decline in the fourth quarter previous fiscal, industry is expected to grow at 4.1 percent this quarter. Manufacturing growing on a low base is expected to push industrial growth. Manufacturing contracted 1.2 percent in the first quarter of FY14. In this quarter, it is estimated to grow 3.4-odd percent. Manufacturing constitutes around 15 percent of total GDP and 75 percent of IIP. In FY14, manufacturing contracted in three out of the four quarters.
Additionally, the extended summer is expected to benefit construction, which is estimated to grow 3-4 percent versus 1.1 percent YoY. Overall pickup is expected to support industries.
Agricultural growth on the other hand may disappoint with a growth figure below the 2.8 percent consensus. The first quarter is generally a lean period for agriculture, which generally sees a pickup in the third and fourth quarter. Delayed south-west monsoon and lower sowing will show effect in the second and the third quarter onward.