Citigroup ups India's GDP estimate at 6.8 pc for FY10

MUMBAI: With the Indian economy witnessing green shoots of recovery, Citigroup on Wednesday upped the growth projection for FY10 to 6.8 per cent from 5.5 per cent.

But, irregular monsoons, rising commodity prices and possible squeezing of capital markets could act as dampeners, a Citigroup said in a report titled 'India Economics'.

"We revised out FY10 GDP numbers to 6.8 per cent from 5.5 per cent and FY11 GDP to 7.8 per cent from 6.6 per cent," Citi Investment Research, Managing Director, Economic & Market Analysis - India, Rohini Malkani said releasing the report.

"We think India will do better on the back of election results, improvement in the investment climate, both domestic and global, and signs of thawing credit markets," she said.

The upward revision is led by higher investment growth, where the stage is now set for some recovery.

However, further delays in the monsoons and a looming threat of El Nino is likely to have implications for the GDP, inflation and the proposed Food Security Act.

"Inflation has been benign with WPI entering the negative zone. It may edge up to 3.4 per cent by this fiscal-end, but two things to watch out for are oil and food prices given the El Nino threat," Malkani said.

Another cloud to watch out for was unemployment, the report said, adding it could become a 'demographic nightmare' as job losses are a fallout of the global crisis.