Nomura revises India's GDP forecast to 7%

Nomura revises India`s GDP forecast to 7% Mumbai: In view of India's pleasantly surprising GDP growth for the second quarter, Nomura Financial Advisory & Securities (India) today revised the country's FY'10 GDP growth forecast at 7 percent from 6 percent earlier.

"We are revising our GDP growth forecast for FY'10 to 7 percent from 6 percent, taking into account recent upside surprises in agriculture and industrial output and emerging signs of a recovery in the services sector," Nomura said.

India's GDP grew by 7.9 percent, as compared to 6.1 percent in the immediate past quarter, on higher Government spending, a large contribution from net trade and a pick-up in private consumption and investment.

Describing the "lower agriculture output" as the "immediate challenge", Nomura said it could be a drag on GDP in the next quarter and on rural consumption.

"But we expect urban consumption to rebound due to better job prospects," it said.

Nomura, however, believes that the strong data could pave the way for the Reserve Bank to exit from the "very easy policy settings".

"We expect the policy rate hiking cycle to begin in January with a cash reserve ratio hike likely this December," it said.

Bureau Report