2017.05.2908:27:00UTC+00India's Economy Likely To Expand At Steady Pace

India's economy is set to grow at a steady pace in the March quarter of 2017 as the impact of demonetization has started to fade in many sectors.

Gross domestic product is forecast to expand 7 percent in the March quarter, unchanged from the previous three months. The Central Statistics Office is slated to publish the data on May 31.

At the April monetary policy meeting, the Reserve Bank of India said gross value added growth is likely to strengthen to 7.4 percent in 2017-18 from 6.7 percent in 2016-17, with risks evenly balanced.

The central bank said the effects of demonetization should fade away by the fourth quarter of 2016-17.

Shilan Shah, an economist at Capital Economics, noted that the the impact of demonetisation has varied across different sectors of the economy.

The economist said areas other than vehicle production and rail passenger volumes, appeared to have been unscathed from demonetisation.

Further, the tourism sector has held up well in recent months and remains one of the economy's bright spots, Shah said.

Purchasing Managers' survey data from IHS Markit showed that the manufacturing sector expanded in April on strong new orders.

According to the new series of industrial production launched by the statistical office, growth in the sector continued this year. Production expanded 2.7 percent in March and by 1.9 percent in February.

The introduction of goods and sales tax is also set to underpin economic activity.

The International Monetary Fund projected India to expand 7.2 percent this year and 7.7 percent next year.