Growth to fall below 6 pc in case of drought: StanChart

NEW DELHI: Standard Chartered Bank has said that the country's growth this fiscal could dip to 6 per cent in the case of a drought but the government's fiscal measures should prevent it from falling further.

"...growth could dip to below 6 per cent (we forecast 6.4 per cent for FY'10) in the event of a drought, support from fiscal measures should prevent it from falling more dramatically," Standard Chartered Bank said in a report.

It further said that a slowdown in personal consumption expenditure, which contributed 55 per cent of overall GDP in the last fiscal, is inevitable, should the rains fail, as the agriculture sector employs 52 per cent of the total labour force.

It added that drought would also have an adverse effect on the industrial sector.

As per the latest report released by the Indian Meteorological Department (IMD), the cumulative seasonal rainfall for the country as a whole from June 1 to July 9 was 34 per cent below the long period average (LPA). A rainfall below 10 per cent of the LPA constitutes a drought, the report said.

Recently, the Centre for Monitoring Indian Economy (CMIE),an economic think-tank, has revised down India's growth forecast to 5.8 per cent in the current fiscal on account of lower agricultural output and slower industrial recovery due to the poor progress of monsoon.