Pranjul Bhandari, chief India economist at HSBC said they have created a new India growth tracker which addresses some of the problems that we faced with GDP as the sole indicator of economic activity in India.

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They have created a monthly indicator that is a better indicator of where the growth has turned rather than just the gross domestic product (GDP) numbers.

“Both our tracker and also the GDP are showing that in the quarter ending December activity rose on a sequential basis. So, in that sense at this point it seems worst is behind us. I am not saying that we are accelerating from here but the slowdown that we saw most of 2019, could be behind us,” she added.

She said, “India growth tracker brings together about 9 variables. It gives month on month sequential update on activity. It showed that activity had sprung up in October and November, slowed a bit in December but January again has been strong and some of the initial indications for February, for example PMI, GST collections have also been slightly on the positive side."

So, we can say that we have bottomed out but that does not mean we are going to accelerate from here on, she reiterated.

We are also seeing indications of services doing better than industry. Finance in general has stabilized. However, one is uncertain of coronavirus impact.

When asked about next quarter, Bhandari said, “We do not think that January-February-March quarter would be hugely higher than the October-November-December quarter. On the other hand, we do not think it will be lower either because some of the data that we have got for January and February, for example PMI seems to suggest that activity is strong.”

“Therefore, Q1 of FY21 GDP growth estimate is at 4.5-5 percent but in the second half if things look up, if coronavirus is behind us after the summers then there could be a sharp increase. So, we see FY21 end at close to 6 percent,” Bhandari said.

Talking about interest rates, the economist said, “Globally, we seem to be headed for a lower central bank rates. Our call at HSBC for Fed is 75 bps cumulative cut by June, so 3 cuts back to back.”

According to her, RBI too would participate in this. "We have one repo rate of 25 bps in April-May-June quarter. It could be as early as April but beyond that at this point, we are not been able to forecast any more rate cuts because inflation is high at 7 percent. It could come lower but don’t think it will come to the 4 percent range easily. It will remain above 4 percent for a long time. So, forecast is for one rate cut and not more than that,” Bhandari said.

First Published:Mar 3, 2020 12:39 PM IST