The downward revision in GDP reflects the lower growth in the agriculture, mining, electricity and construction sectors of the Indian economy, says Nomura in a research note
The government revised lower FY13 (year ending March 2013) GDP growth to 4.5% year-on-year from 5.0% earlier. This downward revision reflects two factors: lower growth in the agriculture, mining, electricity and construction sectors; and an upward revision in FY12 GDP growth to 6.7% year-on-year from 6.2% earlier. This is according to a Nomura research note on GDP growth.
The downward revision in the FY13 GDP number should create a marginally positive base effect for the FY14 GDP growth rate. The advanced estimate for FY14 will be released next Friday (7th February) and Nomura expects real GDP growth of 4.7% year-on-year.
Separately, core infrastructure sector (weight of 37.9% in industrial production) growth rose to 2.1% year-on-year in December 2013 from 1.7% in November 2013. Electricity output expanded at its fastest pace, while coal, natural gas and refinery product output growth contracted, points out the Nomura research note.
On a three-month moving average basis, infrastructure sector output growth has started to moderate again (after a brief spurt in Q3 2013), suggesting that overall demand may be moderating again, says Nomura.
After two consecutive months of negative growth, Nomura expects industrial production growth to move into black in December 2013, but subdued growth in the core sector suggests that overall industrial activity remains very sluggish, the research note concludes.