India grew at 7.5% in March; economists explain the big picture

India's economic growth accelerated to 7.5 per cent in the three months through March from a year earlier, while the annual October-December growth was revised to 6.6 per cent from the previously reported 7.5 per cent, according to government data on Friday.

Below are comments from analysts on the data:

ADITI NAYAR, ECONOMIST, ICRA, GURGAON

"For sectoral growth, it is better to look at what GVA (gross value added) at basic prices has moved at. In that case growth is just about 6.1 per cent in Q4.

That isn't particularly a very good number, I was estimating that to come in at 7 per cent. "I don't think this will have any impact on monetary policy, I was expecting a 25 bps rate cut on June 2, and I continue to expect that."

ABHISHEK UPADHYAY, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI

"This data is based on value-added, so it is difficult to feel and correlate with what is happening to high frequency data like credit growth, rural and urban wages and passenger car sales, which are all still weak.

"RBI will have to feel its way in the economy to get an idea about prices and be confident about their inflation projection. We expect the RBI to cut the repo rate by 25 basis points."

SHILAN SHAH, INDIA ECONOMIST, CAPITAL ECONOMICS, LONDON

"At face value, today's GDP figures for (January-March) suggest that India is the fastest-growing major economy in the world. In reality though, the GDP data remain wildly inconsistent with numerous other indicators that point to continued slack in the economy.

The big picture is that the official GDP data are overstating the strength of the economy, most probably by a significant margin.

"The Reserve Bank (of India) appears to be putting more emphasis on indicators such as capacity utilisation, bank lending, sales of consumer goods and core inflation in policy decisions. On these measures, the case for further policy loosening remains strong.

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI

The downward revision in Q3 suggests some loss of momentum began in the second half of FY2015.

The GVA (gross value added), however, has a different story to tell, showing a marked sequential slowdown from Q2 onwards, implying that larger growth has come on account of net taxes on products.

Agriculture, electricity, construction, finance and public services sectors have slowed in the last quarter.

"Worries of disconnect persist. High frequency data suggests a larger slowdown in Q4 and not in Q3. We continue to rely on high frequency indicators. Challenges remain for understanding the deviations".

(Reporting by Suvashree Choudhury, Himank Sharma, and Swati Bhat)