Mumbai: Morgan Stanley said it had cut India’s economic growth forecast to 5.8% in 2009-10 from its earlier projection of 6.4%, in anticipation of a drop in agricultural output.
The figure is lower than a government estimate of 6.3% for the current fiscal year that ends in coming March, and a central bank projection of 6% with an upward bias.
The US bank said weak monsoon rains and drought in some parts of the country would likely see farm output falling 3% in 2009-10, compared with its earlier expectation for 1.5% growth.
However, higher government spending in the hinterlands and a drop in the share of farm produce on rural incomes will offset the impact on industry and services sector growth, analysts Chetan Ahya and Tanvee Gupta said in a note dated 1 September.
“We expect non-agriculture GDP growth to be largely unchanged,” they wrote.
Data released on Monday showed Asia’s third-largest economy expanded by 6.1% in April-June, largely along expected lines.