Nomura cuts India’s FY10 growth forecast to 6%

Nomura cuts India’s FY10 growth forecast to 6%

Mumbai: India’s economic growth could slow to 6% from 6.3% in 2009-10 dragged by contraction in agricultural growth, Nomura said in a recent note.

The government expects Asia’s third largest economy to expand by 6.3% in the current fiscal year and the central bank sees it growing by 6% with an upward bias.

Nomura cut its 2009-10 agriculture gross domestic product (GDP) growth forecast to 2.2% from 3.5% due to deficient monsoon rains.

“Uncertainty still prevails about the extent of the crop damage and the monsoon season is not over until end-September, so we are reluctant to implement a larger downgrade at this stage, but are mindful that the risks are still on the downside," economist Sonal Varma wrote.

The note also said the impact of the deficient monsoon on agriculture GDP will be visible from the third quarter of 2009 when summer harvesting begins.

However, Nomura said it sees a recovery in manufacturing and consumption sectors.

It raised its industrial GDP growth forecast to 7.3% from 4.9% and services to 7.9% from 7.8% earlier.

Hence it has upgraded its 2010-11 growth forecast to 8% from 7.5% seen earlier.

Last week Morgan Stanley also cut its 2009-10 growth forecast to 5.8% from 6.4% earlier in anticipation of a drop in agricultural output.