Q2 GDP likely to recover to 6%: SBI Research

Mumbai: The economy is likely to pick up to 6 per cent in the second quarter of the current fiscal, owing to an uptick in several macroeconomic indicators like trade, transport and communication, says a report.

"In the first quarter GDP grew at 5.7 per cent,causing a lot of heartburn, but we strongly believe that the second quarter growth is likely to trend higher and might be in the lower end of 6-6.5 per cent band with an upward bias," SBI Research said in a report today.

According to report, IIP growth for September may likely be over 5 per cent as mining and electricity growth is also to be significantly better as state electricity boards have purchased power because of festive demand.

Further, it noted that most of the lead indicators -- foreign tourist arrivals, international passenger and air freight traffic, railway traffic and telephone subscribers has showed an uptick in recent months.

Significantly, it also said that consumption facing sectors are currently witnessing an increase in investment opportunities which "bodes well for the investment cycle going forward".

However, it observed that growth rate in agriculture sector is a point of concern.

"Agriculture growth may be muted as rainfall in the first three months of monsoon was hugely deficit in key food grain producing states like Uttar Pradesh, Punjab, Haryana, and Madhya Pradesh," it said.