SBI expects Q1 GDP growth at 7.7%

New Delhi: The country’s GDP is expected to grow by 7.7 per cent in the April-June quarter on the back of pick up in leading indicators like cement production, sale of vehicles and bank credit, a report by SBI said.

SBI has based its assessment on its Composite Leading Indicator (CLI), which takes into account 18 major macro-economic indicators.

“The CLI is signalling that the economic activity for Q1 FY19 has picked up substantially and the GVA (Gross Value Added) growth would be 7.6 per cent,” it said in its research report ‘Ecowrap’.

However, the headline GVA is being possibly pulled down by a weak agriculture growth, it added.

Major indicators that driving GVA in Q1 FY19 are cement production, passenger traffic, sale of both commercial vehicle and passenger vehicles, non-food credit growth and aircraft movement among others, the report said.

“Finally, how much GDP will be higher than GVA at 7.6 per cent Q1 FY19? We believe it could be 7.7 per cent, as a lot of subsidy has been frontloaded in Q1, implying that the gap between GDP and GVA may just vanish in Q1!,” it said.

The Central Statistics Office (CSO) is scheduled to release quarterly GDP estimate for April-June on 31 August.

The report further said the quarterly trend of subsidy expenditure suggests that the government has been frontloading larger chunk of overall subsidy amount in the first quarter compared to other quarters and this is happening since 2016-17.