July GPD grows at 4.4%: Zyfin

Zyfin estimates GDP growth, inflation on yoy, mom basis; will compute GDP, inflation every month

India's Gross Domestic Product (GDP) grew at 4.4% in July compared to 2.9% in the previous month, according to first of its estimates by ZyFin Research, a research and analytics company.

 

ZyFin estimates GDP growth and inflation on year-on-year basis (comparing the present month with same month last year) and also on month-on-month basis (comparing present month with the previous month same year).

 

In July, the economy grew 4.6% compared to June this year. This sequential growth in June was 3%.

 

“After declining for five straight months, the MoM growth estimates are pointing towards a moderate improvement in growth for July 2013. However, the GDP average growth of 4.3 percent for the first four months of this fiscal year as estimated by ZyFin Research still suggests a struggling economy", said Surjit S Bhalla, Senior Advisor of ZyFin Research.

 

The GDP deflator, a measure of inflation, was estimated to be 5.8%, which falls in line with the official estimates for that month. However, just as retail or wholesale inflation are computed on specific basket of goods, the GDP deflator is calculated upon goods that vary according to consumption in that particular month or year.

 

However, the firm said that good monsoon will lead to a lower inflation in the coming months. "With a good monsoon coupled with early indications of rapid growth in the agriculture sector, we expect inflation to remain below Reserve Bank of India’s comfort level of under 5.0% for the WPI", said Debopam Chaudhuri, Vice President of Research at Zyfin.

 

According to Zyfin estimates, the agriculture grew by 3.2%, manufacturing by 1.1% and services rose 5% in July as

compared to same month last year. The construction segment expanded marginally by 0.2% in this month against July 2012.

 

This showed that the growth in agriculture has not yet picked up according to the expectations of various policymakers. The Prime Minister's Economic Advisory Council had pegged the agriculture to grow by 4.8% in 2013-14 against 1.9% a year ago. They also said that this would take the GDP growth, higher than previous year, to 5.3%

 

"The economy needs to accelerate to an average growth rate of 6.0 percent for the rest of the fiscal year to meet the 5.3 percent GDP growth estimate of the PM’s Economic Advisory Council, which appears to be difficult”, said Bhalla.

 

ZyFin will compute GDP and inflation every month.