India is likely to clock a gross domestic product growth rate of 7.3 per cent for the July-September quarter, DBS said in a research report, adding that the underlying trend in the country is ‘firming up’.
According to the international financial services firm, global headwinds, weak rains and sluggish private sector investment activity are likely to ‘influence’ the GDP numbers.
The July-September quarter GDP numbers are due on November 30.
"For the quarter, we expect real GDP growth to rise 7.3 per cent from 7 per cent quarter before, but down from 8.4 per cent in the corresponding period a year ago," the report said.
The April-June quarter GDP growth slipped to 7 per cent from 7.5 per cent in the preceding quarter.
Meanwhile, RBI has also lowered its economic growth forecast for the current fiscal to 7.4 per cent, from its previous projection of 7.6 per cent.
The report noted that though the underlying trend is firming up, not all growth cylinders are firing at the same time.
On one side, urban demand is on the mend, as indicated by higher passenger car sales, indirect tax collections and easing financing costs.
Moreover, upcoming public-sector wage hikes would also be positive for consumption.
But, this is counter-balanced by subdued rural demand on the back of slow wage growth, successive weak monsoons and lower fiscal support.
On RBI's monetary policy stance, the report said that the central bank is likely to hold the repo rate steady at 6.75 per cent on Tuesday.
"A combination of pending wage adjustments, uptick in CPI inflation, delay in supply-side fixes and external event risks (US Fed rate hikes) will leave the central bank on a cautious footing," DBS said.
It added that these concerns will be aired at the policy review, with the guidance likely to point towards a prolonged pause into the next fiscal year.
Reserve Bank Governor Raghuram Rajan on September 29 effected a more-than-expected interest rate cut of half a per cent to spur the economy.
