Jan-Mar growth to be around 7.1%, says DBS

India's GDP growth for the fourth quarter of 2015-16 is likely to be around 7.1 per cent, but slow private sector capital expenditure (capex) spending and stressed banking sector will weigh on the economy's growth potential this year, says a DBS report.

According to the global financial services major, India continues to fare relatively well despite a challenging global backdrop, however, domestically certain pockets remained weak. Services sector is expected to compensate for subpar industry growth and weak farm output amid subpar rains and warmer than usual heat.

Some service indicators like visitor arrivals, service sector Purchasing Managers' indices were also positive, making up for the weak financial sector metrics, especially loan and deposit growth, the report said.

Meanwhile, recent macro indicators especially infrastructure industries growth, including steel and cement output have been positive, along with strong auto sales. These coupled with improved transmission of the easy monetary policy are likely to lower borrowing costs, it said.