Indian economy could see a slower growth at 5.6-6 percent in the current fiscal if the monsoon remains poor, global financial services major Citi has said.
The estimate is much lower than Citi’s earlier growth projection of 6.4 percent for India, which saw its economic expansion touch a nine-year low of 6.5 percent last fiscal.
“A poor monsoon could result in GDP coming in at 5.6-6 percent,” Citi said in a report yesterday. The cumulative rainfall in June was about 30 percent lower than normal.
“Despite the changing composition of GDP (share of agri at 15 percent against 30 percent) and mitigating factors such as NREGA, growing share of winter crop, use of gold as collateral, the economy is not yet water-proof,” the report noted.
About 50 percent of workforce are into agriculture and only 36 percent of the country’s land is irrigated. After clocking 8.4 percent growth for two consecutive financial years, Indian economy expanded just 6.5 percent in the last fiscal.
“As is well known, the interplay of the four deficits (current account, fiscal, liquidity and governance) has taken its toll on the India story with growth slowing to a nine-year low,” Citi said.
According to the report, small fuel price hikes, coupled with measures that are largely execution in nature, could make the environment conducive for investment.
PTI