Centre for Monitoring Indian Economy slashes FY13 GDP growth forecast to 6.7% on poor monsoon

MUMBAI: Economic think-tank CMIE today revised downward the country's real gross domestic product (GDP) growth forecast by half-a-percentage point to 6.7 per cent for the current fiscal from 7.2 per cent projected earlier, citing poor monsoon.

"We have scaled down our GDP growth forecast projection for 2012-13 to 6.7 per cent as against our earlier growth forecast of 7.2 per cent," Centre for Monitoring Indian Economy (CMIE) said in its latest report on the economy.

The progress of the monsoon, critical for agriculture, has been quite weak during the 2012 season and this could have an adverse impact on the farm sector growth, it said.

"We expect agricultural crop production to decline to 2.3 per cent during the fiscal."

Agricultural production had last declined by 3.6 per cent in 2009-10 when monsoon was deficient by 22 per cent.

According to the city-based research agency, between June 1 and August 4, rainfall deficit was at 19 per cent with deficit in July, the wettest month of the monsoon season, itself being 13 per cent.

Major states like Gujarat, Karnataka, Maharashtra, Punjab and Haryana received deficient rainfall and acreage under major crop is down by 9.2 per cent by August 3 compared to to the area sown a year ago, the report said.

Consequently, foodgrain production is projected to fall by 2 per cent at 250 million tonnes on account of drop in cereals as well as pulses, CMIE said.

However, even after the decline, production will be second highest since output was estimated at an all-time high of 257 million tonnes in 2011-12, it said.

The decline in major crop production is expected to bring down farm sector growth to 1.6 per cent in 2012-13 from 2.4 per cent projected earlier, CMIE said.