India's Q3FY18 GDP growth rises to five-quarter high of 7.2%

"All three sectors - agriculture, industry and services - have accelerated in the third quarter. "Importantly GST disruption is seen waning as borne out by manufacturing sector growth at 8.1% in October-December vs 6.2% in July-September. Construction, government services and agriculture have led the growth in the December quarter. Broadly, the numbers are in line with our estimation for full year GDP at 6.7%. We have added the risk of a rate hike sometime between June to August 2018 following the recent monetary policy minutes, hinging on the inflation trajectory, and the GDP numbers reinstate our views," said Shubhada Rao, chief economist, YES Bank. "Settling down of GST reforms will boost growth in FY 19. RBI has to balance between growth and inflation.

The recently released minutes of the MPC's last policy meeting showed growing concerns of embers over continued inflationary risks arising from high food and crude prices. High bad loans and reported fraud in the banking system have already happened. Right measures to eradicate such incidences in future and finding NPA resolution is the path ahead. There are concerns of rising fiscal deficit and possibility of interest rates rising further. While all other things seem to be in place, paucity of rainfall can be major risk in next one year. Creating jobs for the younger generation will lead to annual growth rate above 8%," said Anita Gandhi, whole time director, Arihant Capital Markets.