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INSTANT VIEW-India's economic growth drops to 5.8% in Jan-March, falls behind China


BENGALURU, May 31 (Reuters) - India's economy grew at a much-lower-than-expected 5.8% in the January-March period, its slowest pace in 17 quarters, and falling behind China's pace for the first time in nearly two years, government data showed on Friday.

A Reuters poll of economists had forecast a growth of 6.3% for the March quarter, compared with a 6.6 % rise in the October-December period in 2018.

COMMENTARY ANAGHA DEODHAR, ECONOMIST, ICICI SECURITIES, MUMBAI "The growth numbers are much lower than our expectations. This data is definitely a big negative surprise. Growth is likely to remain weak in the first two quarters of FY20. However, it could pick up in H2FY20."

"Fiscal pressures are likely to continue in FY20 and hence, the government does not have any headroom for offering stimulus. We expect the final budget to be broadly similar to the interim budget. We do not expect any large-scale stimulus in the budget."

"Although the Monetary Policy Committee does take growth into account, the primary determinant of monetary policy is inflation. The current level of inflation warrants a rate cut, hence I believe the MPC will deliver a 25bps cut next week. It is not the committee's mandate to boost growth through rate cuts, so the future course of monetary policy will be data-dependent." (Reporting by Chris Thomas in Bengaluru; Editing by Subhranshu Sahu)