Q2 GDP growth may be a little above 6%

Q2 GDP growth may be a little above 6%

Q2 GDP growth may be a little above 6%

The economy is expected to do a shade better in the second quarter (July-September) and clock a little above 6% growth than 5.7% in the previous (April-June) quarter but services sector including finance, trade and transport impacted by demonetisation and GST may play spoilsport.

Economists including those from State Bank of India said they expected July-September growth to be at 6.3%-6.4%. The Ficci's latest Economic Outlook Survey has estimated GDP growth to be 6.2% in the second quarter and further to 6.7% in the third quarter.

It has, however, said that the impact of demonetisation and GST appear to be bottoming out something which independent analysts are still worried about. Most of them believe that the services sector specially finance may drag down the growth numbers.

Official data shows that the deposit and loan growth have not picked up since the June quarter and they hover somewhere around 4%-5%.

Similarly trade, hotels, transport and communication have been sluggish even after five months of the GST implementation as the teething troubles which were expected to be over by now, remain. According to the recent official data, the GST has not only not benefited the consumer at large, it has also punched a hole in government's revenues with the net tax collection dipping every month.

Business surveys have shown an improvement in industrial and manufacturing activities in the recent months owing to Dussehra and Diwali festivals. This, analysts say is a net positive for the GDP numbers to be out on Thursday.

Global crude oil and other commodity prices which have been rising in the recent months are expected to put pressure on growth numbers. However, once the GST gets integrated in GDP computation by the third and fourth quarters or the period between October and March, the economic growth numbers may show a sudden rise and reach beyond 7%. But that is expected to happen only by March 2018.