Economy probably grew 4.8 percent during Jan-March

By Rahul Karunakar

BANGALORE (Reuters) - Indian economic growth probably nudged up in the three months to March from a near four-year low the previous quarter, a Reuters poll showed on Tuesday, suggesting a gradual turnaround from a prolonged slowdown.

The median consensus of 37 economists showed gross domestic product expanded 4.8 percent year-on-year, better than the 4.5 percent growth in the previous three months, which was the lowest in fifteen quarters.

"It is only a marginal improvement with much of the support from a slight recovery in manufacturing sector and better trade data in this quarter (January-March) compared to the previous quarter," said Kruti Shah, an economist at Karvy stock broking.

If the consensus proves correct it would mean India's full year growth for 2012/13 (April/March) was worse than an official preliminary estimate given in February that pointed to decade low growth of 5.0 percent.

A moderate recovery in Indian factories, exports and investments were probably the main drivers for an increase in overall growth in the quarter through March.

Data showed year-over-year industrial output grew in March, for the third month in a row, after shrinking for the majority of last year, while capital goods output - a key barometer of investment - rose for a second straight month, albeit off a low base.

"Overall, there is little to suggest that the economy will witness a V-shaped recovery, though the lead indicators suggest that activity has likely bottomed out," said Radhika Rao, an economist at DBS in Singapore.

Also, India's exports have risen from year ago levels in each of the first four months of 2013.

But the current account deficit, which hit an all-time high in the quarter to December, remains under pressure as an April trade deficit of $17.8 billion was 72 percent higher than the March deficit.

Whereas the Reserve Bank of India has remarked on its limited room to ease policy, while cutting its policy interest rate three times since the start of the year, expectations for another cut next month soared during the last two weeks after a surprisingly benign inflation report.

The headline wholesale price inflation rate fell below 5 percent in April, dropping within the RBI's comfort zone for the first time in more than three years.

The RBI's policy repo rate stands at 7.25 percent, having cut it by a quarter point earlier this month for the third time since January. Investors, however, are hoping that Prime Minister Manmohan Singh's minority government finds enough strength to push through more reforms to boost the economy before an election due early next year.

(Polling and analysis by Shaloo Shrivastava; Editing by Simon Cameron-Moore)