Is the big upside surprise in GDP growth sustainable? Radhika Rao of DBS Bank explains

economictimes.indiatimes.com:

Radhika Rao, Sr Economist & Executive Director, DBS Bank, says “if we look at the real GDP, I do not see any justification that the authorities might find to go too dovish too fast. Even this real rate gap that we all refer to, even that kind of loses the debate if this is the kind of growth momentum we are carrying. So, net-net, we will certainly wait for one more quarter of data. I think backward revisions need to be factored in and this kind of a gap between GDP and GVA in two quarters might normalise so that we might see real GDP adjust lower.”

What is your first take of the completely divergent GDP number that has come in at 8.4%. What were you pencilling in?
Radhika Rao: I think we were at about 6.8% for the real GDP and expecting the GVA to be about 6.5-6.6%. I think our GVA number is along what the print is, but the real GDP is certainly seeing a very strong upside surprise. In fact, we did a double take to see it was in fact, 8% plus! That means for the three quarters of the fiscal year, we are actually averaging about 8%, a massive upside surprise to the RBI's forecast, our forecast, as well as certainly what the advanced estimates were suggesting.

But when you talk about the real sectors, agriculture, for example, the data is just coming in, from what I gather farm growth has actually slowed down much more than we had anticipated and seems to be in a slight negative. I hope I am seeing the right set of numbers. But you have got manufacturing growth that has picked up to about 11.5% and services doing