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Note ban effect: GDP growth to slow to 6.7% in Jan-Mar 2017, says Nomura

'We expect growth to bounce back to 7.3% in second half of 2017 and 7.7% in 2018,' Nomura said

Press Trust of India  |  New Delhi 

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India's is expected to slow to 6.7 per cent in the January-March quarter of this financial year as overall activity is yet to bounce back to levels seen prior to demonetisation, says a report.

Though the adverse growth effects of are waning, the pace of improvement is gradual and not yet broad based, the Japanese financial services major said.

"We expect to slow from 7 per cent in October-December 2016 to 6.7 per cent in January-March 2017 as activity is yet to recover to levels seen prior to demonetisation," said in a research note.

It further said, "We expect growth to bounce back to an average of 7.3 per cent in the second half of 2017 and 7.7 per cent in 2018.

Meanwhile, the Policy Signal Index (NRPSI), that tracks the apex bank's policy decisions, rose to 0.08 in March from 0.01 in February.

"The rising positive NRPSI value suggests that the next move will likely be a hike, although it is not imminent," it said.

"A pick-up in headline CPI inflation, better global conditions (exports) and narrowing interest rate differentials (with the US) have lowered the probability of a rate cut and increased the probability of a hike," it added.

In the February 8 policy review meet, the kept key interest rates unchanged at 6.25 per cent and said it is awaiting more clarity on the inflation trend and the impact of on growth.

The next meeting of the Monetary Policy Committee (MPC) is scheduled for April 5-6, 2017.

First Published: Wed, March 22 2017. 13:57 IST