India’s GDP revised downwards to 7.5% from 7.7% on weak agricultural growth

New Delhi: India Ratings on Thursday revised downwards to 7.5% the GDP growth forecast, from earlier estimate of 7.7%, for the current financial year because of weak agricultural growth.

“The downward revision in forecast is primarily due to the lower agricultural growth caused by a deficient rainfall,” India Ratings and Research said in a report on Thursday.

It expects agricultural growth to expand 0.9% this fiscal from 0.2% of FY15.

The report said that although the sector has over the years become more resilient to monsoon shocks, agricultural output in a large parts is still dependent on rains.

The encouraging part is the sowing of kharif crop for 2015. The total area sown under kharif crops till October 16, 2015 reached 103.88 million hectares from 102.66 million hectares for the same period in 2014, it said.

It added that although investment is showing signs of incipient recovery, a full blown investment recovery will take another 12-18 months.

According to India Ratings, the industry is likely to expand 6.8% in FY16, 0.2% points higher than its earlier forecast.

“Besides, the government’s key focus ‘Make in India’, a budgetary push, the early signs of revival in investment or consumption cycle coupled with a fall in inflation and interest rates are expected to drive the industrial recovery,” the report added.

The inflation based on both wholesale price index and consumer price index moderate to negative 1.5% and 4.8%, respectively in FY16, it said.

The report further added that the fiscal deficit target of 3.9% for FY16 is achievable because the projections of government’s net earnings and expenditure for the year are modest.