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| India's growth rate may fall to 5.5% this fiscal: Nomura |
| Press Trust of India / New Delhi Aug 17, 2009, 18:46 IST |
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India's growth could fall to 5.5 per cent from 6.3 per cent in the current fiscal, mainly due to the drought-like situation across the country, financial services firm Nomura today said.
"In a drought scenario, GDP growth could fall to around 5.5 per cent in FY10 compared to our base case forecast of 6.3 per cent," Nomura said in a note.
It said cumulative nationwide rainfall between June 1 and August 12 has been measured 29 per cent below normal levels and now. "Even if normal rains fall for the rest of the season, cumulative rainfall will remain around 20 per cent below normal levels," it added.
The Meteorological Department has officially declared 2009 a drought year, Nomura said.
However, it added that signs of a global recovery and its own composite leading index for India point to stronger non-agriculture GDP growth.
Also, the decline in rural income could be partly offset by alternate rural job opportunities under the National Rural Employment Guarantee Act (NREGA), government spending on rural infrastructure, last year’s increase of minimum support prices for foodgrain and diversification into higher-value products.
Nomura said there is upside risk to inflation. "The current stock of rice and wheat are sufficient, but the prices of sugar, pulses, other coarse cereals and oilseed, where there are no buffer stocks, could rise more sharply, putting upward pressure on the price of manufactured food products in due course," Nomura added.
Meanwhile, another financial services firm Citi today said India's growth rate could fall to 5.2 per cent in the current fiscal.
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