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Crisil cuts India's growth forecast to 5.5
percent
Tuesday August 07, 2012 08:45:20 PM,
IANS
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Mumbai: Research and
ratings agency Crisil Tuesday cut India's economic growth forecast
to 5.5 percent for the 2012-13 financial year from its earlier
estimate of 6.5 percent, citing deficient monsoon and worsening
Eurozone crisis.
It also raised India's core inflation forecast to 8 percent for
this fiscal from 7 percent announced earlier.
"The downward revision in India's growth forecast factors in the
adverse impact of rainfall deficiency (an expected deficiency of
15 percent for June-September 2012) and worsening of the Eurozone
growth outlook," Crisil said in a report.
Referring to a Standard & Poor's forecast, it said Eurozone
economy was likely to contract by 0.6 percent in the current year.
Despite slowing growth, Crisil revised upward its average
Wholesale Price Index (WPI) inflation forecast for 2012-13 to 8
percent to reflect the adverse impact of deficient monsoon on food
inflation.
Crisil's growth estimate is much lower than the growth forecast
announced by the government. The government is aiming at around 7
percent growth, while the Reserve Bank of India last week lowered
the growth outlook to 6.5 percent for 2012-13.
India's economic growth slumped to nine-year low of 5.3 percent in
the quarter ended March. For 2011-12, India's GDP expanded by 6.5
percent, substantially down from 8.4 percent growth registered in
the previous year.
In the report, "India: Macroeconomic Outlook Revision 2012-13", Crisil sees more pain in Indian economy as all the macro-economic
parameters are estimated to worsen.
"We now expect the fiscal deficit to worsen to 6.2 percent of GDP
in 2012-13 from our earlier estimate of 5.8 percent," it said.
The increase in the fiscal deficit to GDP ratio largely reflects
lower revenue growth as a result of slowing GDP growth. In case of
a substantial fiscal stimulus to the economy, the fiscal deficit
to GDP ratio could worsen further, the report said.
"Indian rupee is now expected to settle around 53 against a dollar
by March 2013 compared to our earlier forecast of 50 against a
dollar, Crisil said.
"Given the worsening of the Euro zone economy as well as domestic
growth slowdown, we now expect the Indian economy to attract lower
foreign capital inflows compared to our earlier estimate," it
added.
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