The Indian economy is at initial stages of recovery, global brokerage firm Nomura has said.
But it stuck its neck out, saying the GDP growth is expected to rise to 8 per cent this fiscal as against 7.3 per cent in 2014-15.
According to Central Statistics Office (CSO) data released on Saturday, the Indian economy grew at 7.3 per cent in 2014-15, up from 6.9 per cent a year ago, mainly due to improvement in the manufacturing sector.
Talking about the GDP numbers, the Japanese brokerage house said one can paint both a bearish or bullish picture, but it’s in the “glass half-full camp”.
“Despite the scepticism, we are optimistic and continue to believe that the Indian economy is at the initial stages of a business cycle recovery,” Nomura said in a research note, adding that lower inflation, easier financial conditions, policy efforts and rising profit margins are expected to back up a cyclical recovery.
Pegging the GDP growth at 8 per cent this fiscal, Nomura said key risks to this assumption are a bad monsoon and weak global demand.
On policy rates, the report said: “We expect RBI to cut the repo rate by 25 basis points to 7.25 per cent on June 2, in line with the consensus, followed by a pause until end-2016.”
The central bank has lowered its policy rate twice so far outside the cycle in 2015, but kept it unchanged at its last review on April 7 due to fears of unseasonal rains impacting food prices.
