Citi says Q1 growth may fall below 5%
11 Aug 2012 9:14 AM IST
India's economic growth could fall below 5 per cent in the first quarter of current fiscal, impacted by contraction in industrial output and deficient monsoons, global research firm Citi has said.
‘The (industrial) production numbers will have a bearing on the ‘value-add’ industry numbers for Q1 FY'13 GDP. This coupled with sub-par monsoons and the deceleration seen in some of the service sectors could result in a sub 5 per cent Q1 FY'13 GDP,’ Citi said in its ‘India Macro Flash’ report.
The data released said industrial output in the first (April-June) quarter contracted by 0.1 per cent, against a healthy 6.9 per cent growth in the corresponding period last fiscal. For the month of June, IIP declined by 1.8 per cent, against a growth of 9.5 per cent a year ago. Besides, rain has been 20 per cent lower during June-July, affecting kharif crops, mainly coarse cereals and pulses.
Karnataka, Gujarat, Maharashtra and Rajasthan are facing drought-like situation.
Last week, the Met department said the monsoons will be below normal by 9-10 per cent of the long period average.
Monsoon is the life-line of the agriculture sector as only 40 per cent of the cultivable area is irrigated.
The Reserve Bank of India in its policy review last month had kept key interest rates unchanged but cut its growth expectations for the fiscal to 6.5 per cent from the earlier 7 per cent, blaming high fiscal deficit, sticky inflation and a possible drought.
‘The (industrial) production numbers will have a bearing on the ‘value-add’ industry numbers for Q1 FY'13 GDP. This coupled with sub-par monsoons and the deceleration seen in some of the service sectors could result in a sub 5 per cent Q1 FY'13 GDP,’ Citi said in its ‘India Macro Flash’ report.
The data released said industrial output in the first (April-June) quarter contracted by 0.1 per cent, against a healthy 6.9 per cent growth in the corresponding period last fiscal. For the month of June, IIP declined by 1.8 per cent, against a growth of 9.5 per cent a year ago. Besides, rain has been 20 per cent lower during June-July, affecting kharif crops, mainly coarse cereals and pulses.
Karnataka, Gujarat, Maharashtra and Rajasthan are facing drought-like situation.
Last week, the Met department said the monsoons will be below normal by 9-10 per cent of the long period average.
Monsoon is the life-line of the agriculture sector as only 40 per cent of the cultivable area is irrigated.
The Reserve Bank of India in its policy review last month had kept key interest rates unchanged but cut its growth expectations for the fiscal to 6.5 per cent from the earlier 7 per cent, blaming high fiscal deficit, sticky inflation and a possible drought.
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