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DBS sees more policy fine-tuning from govt in weeks ahead

Press Trust of India  |  Singapore 

The Development of (DBS) expects policy fine-tuning from the Indian -- on the lines of the Goods and Services (GST) -- in coming weeks.

According to DBS, incoming high-frequency data are likely to improve. The index of industrial production for August -- due this week -- is poised to extend gains from July's 1.2 per cent, said DBS in its daily economic report today.

As GST-driven distortions fade, expectations are set on festive-driven demand, good monsoon, remonetisation and higher disposable following an increase in wage or allowances to provide support to the production outlook, it said. Production in 2017-18 is likely to be around 2%, slower than last year's 4.6 per cent, added the group.

It saw more such pockets of improvement in high-frequency data prints, including core industries index, PMIs (Purchasing Managers Index) and auto sales. This should translate into a growth average of 6-7 per cent in the second half of 2017-18 after the trough in the June quarter, the stated.

While this still implies that full-year growth will be at a three-year low, the urgency to adopt pump-priming measures is lower, the lender felt. In the long run, the onus is on the to support growth once the impact of uncertainty rolls off, it added.

More emphasis will be on recovery of non-performing assets and rebuilding balancesheets, according to DBS.

It sees less room for further rate cuts, with the budget seen to modestly miss its 2017-18 targets owing to revenue shortfall. A less rigid deficit target will also reduce the extent to which spending needs are to be compressed in the second half of this fiscal.

The lending agency also noted that the has just relaxed a handful of restrictions by lowering rates on 27 items and 12 services.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, October 09 2017. 13:02 IST