Indian economy grew at 7.3% during December quarter of fiscal 2016, which was lower than 7.7% growth recorded in September quarter. However, GDP growth was higher than market expectation of 6.88%. During the same period last year, the economy grew 6.6%.

GDP at constant (2011-12) prices in Q3 of 2015-16 was Rs 28.52 trillion, as against Rs 26.59 trillion in Q2 of 2014-15, showing a growth rate of 7.3%.

Going ahead, HSBC Securities said that the country's growth would depend on the fate of normal monsoon, lower inflation and the impact of seventh pay commission.

3Q2015 was afflicted by a range of extreme weather related events. The drought through the monsoon season was followed by post monsoon (October-December) rains trending 23% below normal. And strangely enough, another part of the country, the south Indian city of Chennai was afflicted by severe floods during the quarter.

''Manufacturing was the biggest surprise, with real growth rising 12.6% y-o-y (vs. 9% in 3Q) even as industrial production (IP) and PMI Manufacturing were indicating a slowdown, following the Chennai floods,'' said HSBC.

Pranjul Bhandari, Chief Economist, India HSBC Securities said, ''Double digit growth reported in manufacturing, despite the floods in Chennai, goes against signs of slowdown in other indicators, and can only partly be explained by falling input costs. Domestic demand weakened as poor investment growth offset the pick-up in private consumption.''

The economist further said, ''As oil prices stabilize over time, this 'value addition' impact is likely to be smaller, and volume growth will have to pick up the slack.''

Commenting on the FY17 outlook, Bhandari said, ''FY17 is likely to be a year of changes. The "oil bounty" was the main growth driver last year. True, oil prices continue to trend lower and could impart some positive impulse to growth. But the quantum will be much smaller than last year.''

''However, the country is likely to lose its main driver of growth. But there are
some other drivers in the horizon like; normal monsoon rains, lower inflation and impact of seventh pay commission.''

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