India's Q3 GDP growth projected at 7.6%

New Delhi: The country is expected to grow by by 7.6 percent in the October-December quarter of the current fiscal -- the fastest pace of expansion in five quarters -- India Ratings and Research (Ind-Ra) said on Friday.

"Growth may have ticked higher in third quarter by 7.6 percent. The growth is likely to get support from a favourable base effect, as GDP in third quarter of last fiscal grew by 6.6 percent," Ind-Ra Chief Economist Devendra Pant said.

In current fiscal, Indian economy grew by 7 percent in first quarter and 7.4 percent in second quarter.

The official GDP data for the third quarter of the current fiscal is scheduled to be released on Monday.

"Domestic demand witnessed during the festival season is expected to support growth in the third quarter, even as global headwinds have had an adverse impact on manufacturing and exports," Pant said.

He said investment activity has been muted due to low capacity utilisation in several manufacturing sectors, highly leveraged balance sheets of infrastructure companies and stretched balance sheets of banks.

The onus of reviving the investment cycle under such circumstances has therefore fallen on the government, which it did by increasing government capex by Rs 70,000 crore over the in the 2015-16 budget, Ind-Ra said.

"While revival of the capex cycle will take a while, there is higher hope of a revival in consumption demand, due to falling inflation and monetary easing," Pant said.

The Indian economy is expected to grow between 7-7.5 percent in the current fiscal. Last fiscal, it grew 7.2 percent.