Normal Monsoons Can Boost GDP By 50 Basis Points: BNP Paribas

Posted By: Religare
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BNP Paribas said normal monsoons could help push the economic growth to 8 per cent in the current fiscal, reported PTI.

"Monsoons could add up to 50 basis points (0.5 per cent) to the gross domestic product while the economy could also reduce by the same quantum if the country faces another year of drought," BNP Paribas chief economist for emerging markets Richard Iley told reporters.

Normal Monsoons Can Boost GDP By 50 Basis Points: BNP Paribas

He also said the economy can achieve an eight per cent growth if private capital expenditure increases, agriculture and exports recover.

The government has projected a 7.5 per cent economic expansion for the current fiscal. Earlier this week, Finance Minister Arun Jaitley had said the economy could clip at 8-8.5 per cent if the Met department's above normal monsoons forecast rings true.

Iley noted that IMD's track record on monsoon in last few years "has been good".

Iley said he does not expect an RBI rate cut in June as Governor Raghuram Rajan will wait for clarity on the rainfall patterns and will most likely act in the September review.

He noted that food inflation has been relatively "quiescent" with the key exception of pulse prices.

Other than normal monsoons, it is important that oil prices remain under USD 50 a barrel, he said.

BNP Paribas has maintained a Sensex target of 29,000 for December and said its best picks are India and China, to which it has given 'most overweight' in Asia.

Noting the momentum in FDI inflows, he said the USD 100-billion target set by the Narendra Modi government for 2019 is feasible.

Read more about: bnp paribas, gdp, monsoon
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