A Prasanna, chief economist, ICICI Securities-Primary Dealership, is expecting the GDP growth at 4.7 percent for the second quarter. He said the number was arrived at after taking into consideration the strong government spending in the second quarter. The number, he said, could be even lower in the absence of government spending.
He acknowledged that there were reports that the number could even be 4 percent.
“If you look at high-frequency indicators pertaining to the private sector, even we were getting a number closer to 4 percent, but second quarter’s government spending — both the central and state governments... the spending growth was very strong. Therefore, taking that into account, we arrived at 4.7 percent,” said Prasanna in an interview with CNBC-TV18.
The GDP data will be released later today. A CNBC-TV18 poll pegs growth for the second quarter at 4.64 percent versus 5 percent in the previous quarter.
Talking about the expectations over the growth numbers, Prasanna further said that their estimates could also stand at 4.7 percent with a downward bias.
“Of course there is a bit of uncertainty... how the government’s spending translates to GVA... definitely there is a bit of a gap in our understanding and that leads to uncertainty. Therefore, its 4.7 percent with a downward bias,” added Prasanna.
Talking about monetary policy, he said, “Any number which is going to print below 5 percent (GDP growth) would mean that it’s well below RBI’s own estimate for the quarter and accordingly, they will have to revise down full year’s estimate also which should lead to a rate cut. So our base case is 25 bps rate cut.”