Mumbai: Citigroup said on Tuesday it was cutting its target for India’s economic growth for the 2009-10 fiscal year to 5.8%, from 6.8% earlier, taking into account the effects of a weak monsoon.
“Factoring in negative agriculture growth but leaving industry and services unchanged, we cut our FY10 GDP estimates to 5.8% from 6.8%, but retain FY11 (2010-11) estimate at 7.8%,” it said in a note.
The bank maintained its growth forecasts for industry at 5.5% and services at 8.6%. The US bank also said that it now expected policy tightening of 125 basis points for 2009-10, compared with an earlier forecast of 75 basis points.
Citi said the government’s relief measures to deal with the drought in many districts of the country could widen the fiscal deficit to 7% from 6.8% of the gross domestic product.