Now Crisil scales down India's GDP growth to 7%

Mumbai: Amidst bleak global economic outlook and weak domestic investment scenario, Crisil Research too has lowered India’s GDP growth forecast for current fiscal to 7 percent from its October estimate of 7.6 percent.

The forecast has been scaled down in view of the deterioration in the global economic outlook led by the euro zone recession, a weaker-than-anticipated domestic investment climate and the limited fiscal space to stimulate the economy, a Crisil report said today.

[caption id=“attachment_151446” align=“alignleft” width=“380” caption=“Euro zone accounts for nearly 15 percent of the country’s merchandise exports. Reuters”]  [/caption]

“GDP growth is expected to slip to 6.7 percent in the second half of this fiscal from 7.3 percent in the first half. This will restrict the overall GDP growth at 7 percent.

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This would be the second-lowest growth in the past nine years after 6.8 percent in 2008-09, the peak of global financial crisis,” Crisil Managing Director and CEO Roopa Kudva said.

A potential recession in euro zone would affect India’s growth by adversely impacting exports and foreign investments during the second half as well in FY13, the report said.

Euro zone accounts for nearly 15 percent of the country’s merchandise exports. In addition, major IT/ITeS companies have a significant dependence on the euro zone. In the past, business cycles here and in the euro zone have

largely moved in tandem, it said.

Industry growth is projected to slow to 4.5 percent this fiscal, given industrial GDP grew at a sluggish 4.2 percent in the first half and a limited upside in growth during the second half, Kudva said.

Industry growth will remain constrained by lagged impact of RBI’s interest rate hikes, weak exports due to slipping demand, particularly from Europe and growing bottlenecks in the mining sector, it added.

PTI