Chillin' out till it needs to be funded
With farm output holding up to a 7.5% growth for Jan-Mar 2011, India’s GDP growth maintained the last few predicted trajectories for the quarter at 7.8% and for the year at 8.5%. This of course means that FY 2012 estimates will come in at 7.5% and a 8% top from the most optimistic as India bulls have been quick at revising the new inflation pegged growth’s caps for their portfolios. Also The year’s four quarters read 9% 8.9% 8.3% and 7.8%. Gross Fixed Capital Formation is almost static at INR 4.7 TLN or $120 billion and manufacturing growth for the quarter suspended at 5.5%. In vestment growth is likely to be muted as Infrastructure Investments do not promote quicker statistics though that impact is unknown on this dampening.
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India in the meantime will hike rates again in a couple of weeks and the China PMI, looked on as a leading indicator for the India dream too, hops into a sub 50 red zone after reporting a 51.5 in the HSBC PMI( traditionally about 5-7% higher than the govt’s IIP figures in China coming in tomorrow) While India still reports a 55 MarkiT it may also go lower to 52 till the middle of FY2012
Mining growth for the year at 7.5% and Construction growth at 8.2% alongwith Utilities and Social Services holding the fort near double digits signify a greater role for them in the Economy going forward than bullishness for the GDP. Farming weights have been reduced to 17% in the current quarter but the year’s growth remains fair at 6.6% vs 0.4% last year
The failures of the Nano and the public land acquisition programmes as also failures in maintaining Private participation in policy reform point to astructural weaknesses (in the knees 🙂 ) in execution that may be the next reform breaker and may mean longer periods of weaknesses for the Indian dream at 7% averages than he good years at 10% . The success in infra financing liquidity with greater institutional and global strengths also remain unsung