New Delhi, Feb 27 (IANS) BofA Global Research on Friday retained its FY26 GDP growth for India at 7.6 per cent, along with raising its FY27 GDP growth from 6.8 per cent to 7.4 per cent, reflecting a less adverse trade backdrop, and reasonably easy fiscal and monetary policy.

This increase essentially represents lowering of risks to growth and resiliency to both private consumption and private investment.

“While commodity prices are inching higher, even at current levels, we see room for monetary policy to stay accommodative,” said BofA Global Research in its note, adding that the revised GDP print will be taken by the Reserve Bank of India (RBI) as an important signpost for future policy.

“Given the strength in the print coupled with normalizing inflation, we expect RBI to maintain a long pause on rates while supporting liquidity conditions to ensure adequate credit intermediation,” it added.

With both the new CPI and GDP series released, “we await to see RBI’s assessment of growth and inflation in the April Policy especially in their monetary policy report, while looking through the data carefully in coming weeks”.

The new GDP series also shows some significant change in sector level composition with secondary sector staying broadly similar, forming 26 per cent of GDP, while primary sector has gained modestly, at the expense of services.

In terms of growth rates, within the GVA, it is the secondary sector which has consistently shown a higher rate of growth, while tertiary sector has outpaced the growth.

“In terms of the overall data, investment share has been lowered marginally in real terms, while private consumption also has lost modestly in its share. Discrepancies have risen at the margin, but this to us reflects lack of informal sector data which requires an annual survey,” according to the note.

The GDP series is based on data from new sources like enhanced use of GST filings, e-Vahan data, payment transactions data, among others.

Apart from new data sources, the constant prices estimate has also undergone substantial changes with double deflator method used for manufacturing along with volume/single extrapolation method where the single deflation was being used, the report added.

--IANS

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