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Crisil Research on Monday cut India’s GDP growth forecast for 2013-14 to 6 per cent from 6.4 per cent as expected earlier.
“We maintain our agriculture GDP growth forecast of 3.5 per cent, but expect industry and services to grow at a lower rate of 4.4 per cent and 7.3 per cent respectively, the firm said in a statement.
The firm stated that weaker-than-anticipated pick-up in household consumption demand will act as a drag on manufacturing sector recovery, and lower lending rates with less headroom for any repo rate reduction before second quarter of 2013-14 will lead to slower growth.
Further, lowering of the Euro zone GDP growth forecast for 2013 to -0.5 per cent (from -0.1 per cent earlier) and issues related to mining and lack of speedy project clearances, which continue to hurt manufacturing, infrastructure and investment activity are also likely to impact the growth process.
“Although we continue to believe that GDP growth in 2013-14 will be greater than last year’s 5 per cent, the recovery is fragile and hinges critically on a normal monsoon,” it said.
According to Crisil, if the monsoons were to fail this year, resulting in no growth in agriculture, then GDP may grow by only around 5.1 per cent.
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