India’s Q2 GDP growth likely to be 7.2%: Mint poll

Economic Growth Projections - India's economic growth is projected to remain strong at 7.2% for the July-September quarter, down from 7.8% in the previous quarter, driven by improvements in rural activity and low inflation effects [1] - Economists forecast GDP growth in the range of 7% to 7.7% for the September quarter, with official data to be released soon [1] Inflation and Statistical Effects - The high projected growth is partly attributed to a low base effect, as GDP growth was only 5.6% in the same period last year [2] - Retail inflation decreased to 1.7% in Q2 from 2.7% in Q1, while wholesale inflation fell to 0.02% from 0.26%, positively impacting real GDP growth [2] Rural Demand and Economic Activity - High-frequency indicators indicate improved growth momentum, particularly in rural demand, supported by rising rural wages and favorable monsoon conditions [2] - Softer inflation, earlier monetary policy easing, and inventory build-up in anticipation of festive demand contributed to increased economic activity [3] Government Expenditure and Urban Indicators - Government capital expenditure growth slowed to 37% compared to 52% in the previous quarter, which may negatively impact overall growth [5] - Urban indicators, such as passenger vehicle sales and air travel, remained weak during the quarter [5] Export Performance - Exports rose by 8.7% during the quarter, contrasting with a 2.2% contraction in the previous quarter, due to front-loading of shipments and trade diversification efforts [6] Monetary Policy Considerations - If GDP growth meets projections, it will slightly exceed the Reserve Bank of India's (RBI) forecast of 7%, complicating potential rate cuts despite low inflation [8] - Weak nominal GDP growth, expected to be under 9%, may keep the door open for a rate cut by the RBI [8] - The rationale for monetary easing is not strong based on current growth trends, but a rate cut of 25-50 basis points may still be considered to prevent deeper economic sluggishness [9]