Q2 GDP surprises at 8.2% growth, rate cut unlikely

The number exceeds both the RBI's projection and the estimate from a Mint poll

- Payal Bhattacharya & Pragya Srivastava

The Indian economy posted a surprising sixquarter high growth rate of 8.2% in the JulySeptember quarter, according to data released on Friday by the ministry of statistics and programme implementationsignificantly higher than the Reserve Bank of India's 7% projection and the 7.2% median estimate in a Mint poll of 15 economists.

Even as economists pointed to record low inflation in recent months contributing to the surge in real GDP growth, the high number significantly dims any expectation of a policy rate cut by the RBI in December.

The bond markets appeared to acknowledge the possibility, with the benchmark 10-year yield moving up to end at 6.5463% on Friday, from 6.5082% in the previous session, Reuters reported. Bond yields move inversely to prices.

The 8.2% figure is much higher than the 5.6% recorded in the same quarter last year, and 7.8% in Q1 of this fiscal year.

Acknowledging that the 8.2% figure "is outside the range of most optimistic estimates", chief economic advisor V. Anantha Nageswaran said full-year GDP growth will be at least 7%, if not higher, aided by a strong 8% growth in the first half of the year and the cumulative effect of structural reforms.

This February, the Economic Survey had projected full-year real GDP growth of 6.3-6.8%.