India at Early Stages of Recovery, Growth to Rise to 8%: Nomura

New Delhi: The Indian economy is in its initial stages of recovery, global brokerage firm Nomura has said. However, it also said GDP growth is expected to rise to 8 per cent this fiscal year as against 7.3 per cent in 2014-15.

According to Central Statistics Office (CSO) data, the Indian economy grew at 7.3 per cent in 2014-15, up from 6.9 per cent a year ago, mainly due to improvement in the manufacturing sector.

On GDP numbers, the Japanese brokerage house said one can paint both a bearish or bullish picture, but it’s in the “glass half-full camp”. “Despite the scepticism, we are optimistic and continue to believe that the Indian economy is at the initial stages of a business cycle recovery,” Nomura said in a research note, adding that lower inflation, easier financial conditions, policy efforts and rising profit margins are expected to back up a cyclical recovery.

Pegging the GDP growth at 8 per cent this fiscal year, Nomura said key risks to this assumption are a bad monsoon and weak global demand.

On policy rates, the report said, “We expect RBI to cut the repo rate by 25 basis points to 7.25 per cent on June 2, in line with the consensus, followed by a pause until end-2016.”

The central bank has lowered its policy rate twice so far outside the cycle in 2015, but kept it unchanged at its last review on April 7 due to fears of unseasonal rains impacting food prices.