Crisil has raised its forecast for the country's GDP growth to 7 per cent from 6.5 per cent for the current financial year, following the first-half growth of 8 per cent that exceeded expectations.
Crisil chief economist Dharmakriti Joshi said that India's real GDP growth stood at 8.2 per cent in the second quarter, exceeding expectations. However, due to easing inflation, the nominal GDP growth was modest at 8.7 per cent.
The first half growth of 8 per cent and an expected slowdown to 6.1 per cent in the second half is owing to the impact of higher US tariffs, Joshi said.
According to Crisil, private consumption was the main driver of higher real GDP growth. From the supply side, growth in manufacturing and services saw a significant rise. Joshi said lower food inflation stoked discretionary spending in the country.
He said that the third quarter is expected to continue benefiting from these tailwinds. While government investment is likely to stabilise, there could be a belated uptick in private investments, according to Joshi.
The rationalisation of GST rates is boosting private consumption, complementing reduced income tax and interest rate cuts induced by repo rate cuts by the monetary policy committee of the RBI.
Also read: GST rejig may absorb fiscal burden: Crisil
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