The outlook for India's economic growth, which plunged below 6 per cent in the first quarter of the current financial year, looks muted with the possibility of GDP
going below 6.5 per cent in 2017-18, says a report.
According to an SBI
Research report, growth of manufacturing and service sector may turn out weak in the July -September quarter as destocking in manufacturing sector activity has well continued in the second quarter of FY18, at least until mid-August.
India's economic growth slipped to 3-year low of 5.7 per cent in the April-June quarter as disruptions caused by demonetisation
spilled over to the third straight quarter amid slowdown in manufacturing activities.
estimates of Q1
show that impact of demonetisation
has not withered completely. The steep decline in manufacturing output, both organised and unorganised bears testimony to this fact," the report said.
It further said that the unorganised sector which accounts for 41 per cent of the GDP
has slowed considerably owing to two factors- climate and demonetisation- and it is not possible to detangle the individual impact of these.
Moreover, agriculture which accounts for 17 per cent of the GDP, is "showing signs of glut", it said.
This, in turn, will not translate into purchasing in rural areas, thus denting the demand, it added.
growth will also be muted and is almost like the Q1
as support from trade, hotel, transport and public expenditure (as the government already spent so much in Q1) will not be there," said the SBI
research report, Ecowrap.
"Overall, it remains to be seen whether the GDP
growth for FY18
stays below 6.5 per cent," it added.
Moreover, the agriculture growth in coming quarters will be muted as rainfall in the first three months of monsoon was hugely deficit in key foodgrain producing states like UP (-26 per cent), Punjab (-19 per cent), Haryana (-31 per cent), and MP (-20 per cent), it said adding the manufacturing and mining sector will show sluggish growth in the second quarter also.
On a positive side, the slowly picking credit growth
in the eve of festival seasons will support the growth, the report said.