Economists peg India’s Q4 GDP growth rate at 4.8%

A group of economists has pegged India's GDP growth at around 4.8 per cent during the last quarter of the 2012-13 financial year, against the government's estimates of an annual average growth of around 5.2 per cent during the January-March quarter of FY'13.

According to the latest estimates by economists from investment banks and consultancy groups, the fourth quarter GDP growth could push India's annual GDP growth reading to a decades low of around five per cent.

Robert Prior-Wandesforde, chief economist at Credit Suisse, pegged India's January-March 2013 GDP growth at 4.8 per cent, on similar lines as estimated by Nomura and DBS.

He attributes low government spending as the main cause although the low interest rate regime could improve investment climate.

"The GDP growth for the March quarter is expected to remain soft at 4.8 per cent, due largely to a reduction in government spending, but we are hopeful that the lower interest rate environment and improving investment should result in better growth numbers from the June quarter," Prior-Wandesforde said in a research note.

Nomura India's chief economist Sonal Verma has pegged India's GDP growth still lower at 4.5 per cent during the January-March 2013 quarter, although for the same reasons like low government spending and subdued consumer demand and low investment levels.

However, a moderation in the wholesale price index (WPI)-based inflation to 4.9 per cent in April, amid weak demand, is expected to pave the way for lower interest rates.

DBS Bank group economist Radhika Rao pegged fourth quarter GDP at 4.7 per cent and the overall fiscal 2012-13 growth rate under 5 per cent.

"After a dismal 4.5 per cent in the December quarter, we expect the final quarter number to register another sub-5 per cent, at 4.7 per cent, despite the slight improvement in the underlying momentum. This should lead the headline reading for FY13 at 5 per cent," Rao said.

According to her, much of the fourth quarter growth came from capital goods and manufacturing sector growth that has helped to stabilise overall growth. Manufacturing goods production grew 1.8 per cent in the January-March 2013 quarter, up from 0.8 per cent during the year-ago quarter.

With a continued ban on mining in many states due mainly to excessive mining and environmental concerns, output in the mining sector has contracted by 4.2 per cent in Q4 of FY'13. The saving grace was a pick-up in capital goods and consumer goods production and a subsequent improvement in overall growth, she noted.

Rao, however, expects consumption to remain subdued while farm output remains stable and service sector growth moderates.

Exports are expected to gain somewhat, although 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, Rao said.

The government is expected to peg FY13 GDP growth at around 5.2 per cent when it release data on 30 May.

India's economy grew at 5.1 per cent during the third quarter of the 2012-13 fiscal against the first quarter growth of 5.5 per cent.