The Q2 GDP number is due today and according to the CNBC-TV18 poll, it is expected to be 8.1 percent, just about making up for the minus 7.4 percent figure last year. While the Reserve Bank’s estimate is at 7.9 percent.
However, gross value added (GVA) is not expected to surge because gross value plus taxes minus subsidies is GDP, and taxes were excellent in the year. So GDP, although it grows at 8.1 percent, GVA will be only 7.6 percent according to a poll, barely making up for last year’s number.
Aurodeep Nandi, India Economist & VP, Nomura Financial Advisory & Securities, and Kaushik Das, Chief Economist, Deutsche Bank, in an interview with CNBC-TV18, shared their views on GDP expectations.
First up, Das said, “Our headline GDP forecast was 8 percent and GVA is slightly lower at 7.5-7.6 percent in line with consensus. So any number, which is closer to 10 percent will attract the attention of markets or if you go down to 7 or 6 percent on headline GDP, that will lead people to take big notice.”
On 10 percent GDP expectations, Das said, “In case there are any revisions, because we often see revisions happening in the previous quarter and if the revisions are big, and if the last year’s last quarter GDP number is marked down, then you can have a high number. So there is a lot of uncertainty.”
“There is a component called discrepancy which leads to contribution to growth, so we have to wait and see but 8 percent looks like a fair number looking at different high-frequency indicators,” he mentioned.
According to Nandi, if the GDP number turns out to be much higher, say at around 9 or 10 percent or it comes very low at around 6 or 7 percent then that would move the needle.
He said, “We have 8.1 percent, in line with consensus and in sequential momentum terms, we have 5.8 percent, quarter on quarter, seasonally adjusted versus some minus 6.3 percent in the previous quarter. Therefore, the momentum is going to be really important and if that momentum turns out to be low, or very high, I think that would make us want to relook at our projection.”
For the entire discussion watch the video