Citi retains economic growth forecast at 8.4% next fiscal

Financial services firm Citi has retained the projection for India's economic growth in next fiscal at 8.4 per cent, saying there is less challenging atmosphere to various aspects of the economy, including outsourcing.

This is despite the fact that the Citigroup Global Markets has revised down its estimate of agriculture growth next fiscal to four per cent from five per cent earlier.

However, it marginally upped its earlier estimates for services growth, Citi said in its report, but did not mention how much.

The report said India has potential to move back to 8-9 per cent growth, given less challenging environment to consumption, investment, outsourcing and the government's emphasis on inclusive growth.

"Given, receding headwinds to consumption, investments and outsourcing, coupled with government initiatives on inclusive growth, we believe India has the potential to move back to the 8-9 per cent growth path. We maintain our FY11 GDP estimate of 8.4 per cent," the report said.

Citi said it expected investment and consumption to recover as demand and credit availability improve. "We expect to see a recovery in both consumption and investments, as headwinds, such as a higher cost of capital, slowing demand, job losses and credit availability, ease out," it said.

Citi forecast an economic growth rate of 7.2 per cent for the current fiscal.