“The worst is probably over for India – we may be at, or close to the bottom,”

Gross domestic product (GDP) growth in India picked up pace in the April-June quarter helped by a rise in construction output, prompting economists to say the worst might just be over for Asia’s third largest economy struggling to return to the days of 8-9 percent growth rates.




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The economy expanded 5.5 percent in the second quarter, beating consensus estimates and marking an improvement from the previous three months when growth came in at 5.3 percent - the slowest pace in nine years.

Economists expect India to better that in the coming months as commodity prices decline and a weak, but stable rupee makes its exports more competitive.

“The worst is probably over for India – we may be at, or close to the bottom,” Robert Prior-Wandesforde, Director of Asian Economics at Credit Suisse in Singapore told CNBC.

“The economy is losing some of the negatives that were hampering it before – oil prices are at a more manageable level, the lagged effects of the interest rate rises in 2010-2011 are fading,” he said, adding that he expects growth to move towards the trend rate of 7 percent in coming quarters.

The Reserve Bank of India forecasts growth will come in at 6.5 percent for the current fiscal year, while the government’s target is 6.7 percent.

Weaker oil prices – which have declined more than 10 percent over the last six months - help to contain India’s current account deficit as the country imports 70 percent of its crude requirements. Higher imports of oil and gold led the country’s current account deficit to widen to a record high of 4.5 percent of GDP in the January-March period.

http://www.cnbc.com/id/48855496