Consumption remains mainstay of growth in India: Investment lags

SINGAPORE - Growth in India continues to be powered by consumption, even as a revival in the investment cycle remains elusive due to the flow of investment credit being restrained from banks burdened by bad debts, according to a research note from ANZ Bank.

“Surprisingly, real GDP growth came in lower than real GVA growth, reflecting the fact that indirect tax collection net of subsidies declined significantly during Q1 of this year relative to last year,” ANZ says.

“Going forward, we expect net indirect taxes to be evened out through the remainder of the year and for India to post a healthy GDP growth rate of 8.0% y/y in FY 2017.

“This will be on the back of an improvement in rural demand and higher consumer spending, thanks to the seventh pay commission wage increase.” www.live.anz.com (ATI).