India GDP & Monetary Policy

India’s economy accelerated in the September quarter 2015, with Real GDP growing by 7.4% yoy, up from 7% in the June quarter. NAB Economics is forecasting a 7.5% expansion in 2015, followed by 7.6% in 2016.

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Summary & Overview

  • India’s economy accelerated in the September quarter 2015, with Real GDP growing by 7.4% yoy, up from 7% in the June quarter.
  • By expenditure, there was a clear improvement in investment spending. Manufacturing, finance and electricity were the standout industry sectors.
  • India’s exports have declined through 2015; lower energy prices have contained the trade deficit.
  • NAB Economics is forecasting a 7.5% expansion in2015, followed by 7.6% in 2016.
  • Headline inflation accelerated to 5% in October,driven partly by rising costs of pulses.
  • The RBI held the policy rate at 6.75% in its December meeting, with an accommodative stance.
  • To facilitate quicker transmission, it is finalising the methodology to allow banks to price loans based on marginal funding costs.
  • NAB Economics is forecasting a further 50bp reduction in the policy Repo rate during 2016 to6.25% by the end of 2016.
  • The inflationary impact of the Pay Commission’s proposals and outlook for food and energy prices are factors that might influence this outcome.

For further analysis download the full report.

India GDP & Monetary Policy – December 2015 ( PDF 1MB)