India's gross domestic product (GDP) is likely to be 6.7 percent in the third quarter of this financial year, which could be a deflator to the 7.2 percent estimate for FY19, the State Bank of India (SBI) said in its research report.
The weak infrastructure activity, based on the previous Index of Industrial Production (IIP), is one of the key reasons for the bank to predict the 6.7 percent GDP growth rate.
The research report said the monthly SBI composite index declined to an 11-month low of 46.10 in January. The index shows the manufacturing activities in the country and tries to predict the periods of contraction and expansion.
"We believe that the GDP deflator, which is presently at 4.1 percent, could be revised downwards by at least 50 basis points, thus pushing the GDP close to 7.2 percent in FY19," the bank said in its report.
One basis point is one-hundredth of a percentage.
In January, the Consumer Price Index (CPI) eased to a 19-month low at 2.05 percent, while the industrial production in December 2018 bounced back to 2.4 percent after sliding to a 17-month low in November.
However, for the current month, the report said that despite the prediction, India's manufacturing growth may slightly grow, but remain on the lower end, at 1.5 percent and IIP at 2.5 percent. But, other non-agricultural growth could keep the GDP of the country in check as it indicates a moderate growth for the economy.
On Goods and Services Tax (GST), the bank said the collections are likely to be lower than the previous month. The amount, the report said, will be around Rs 95,500 crore as against the previous month's collection of Rs 1.05 lakh crore.The recent GST rate cuts can put the fiscal performance of the economy under pressure. The erratic collections of the national tax indicate that the tax regime is yet to stabilise and get accustomed to the economy.