Growth Recovery will be Gradual: India Ratings and Research (Ind-Ra) expects the gross domestic product (GDP) to expand at 7.6% in 2QFY16 compared with 7.0% in 1QFY16 and 8.4% in 2QFY15.
Despite the expectation of a V-shaped economic recovery gaining ground after the formation of NDA government, Ind-Ra had all along maintained that a V-shaped recovery was neither possible nor desirable given global and domestic macroeconomic conditions.
Ind-Ra had opined that a gradual non-inflationary recovery was needed, i.e. the actual rate of GDP growth being closer to the potential rate of GDP growth. Ind-Ra believes the GDP growth so far has followed this trajectory and expects it to follow this trajectory even in the near term.
Agriculture to Witness Low Growth: Although the Indian agriculture has over the years become more resilient to monsoon shocks; agricultural output in a large part of India is still monsoon dependent. In view of the sub-par monsoon in 2015, Ind-Ra expects agricultural growth to come in at 0.5% in 2QFY16 (1QFY16: 1.9%; 2QFY15: 2.1%).
However, the encouraging part is the sowing of kharif crop for 2015. The total area sown under kharif crops during 1 April-16 October 2015 reached 103.88 million hectares compared with 102.66 million hectares for the same period in 2014. Rice has been sown in 37.82 million hectares (down 0.4% yoy), pulses in 11.56 million hectares (up 12.5%), coarse cereals in 18.61 million hectares (up 2.3%), oilseeds in 18.52 million hectares (up 4.0%) and sugarcane in 4.88 million hectares (up 0.2%).
(Continued on the next page)