Govt will cut GDP forecast

FY 2016 target to be 7.5 %

 The government is expected to pare India’s economic growth forecast for the current fiscal to 7.5 per cent, against the Budget forecast of up to 8.5 per cent. This may be announced in the mid-year economic review for 2015-16, and is likely to be presented in Parliament on December 18.

The downward revision is expected to come on the back of the deficient monsoon which poses a risk to agriculture and rural consumption.  In the recently released official numbers, the GDP clocked 7.4 per cent in the July-September quarter, but the growth was mainly driven by the manufacturing sector that accelerated 9.3 per cent.Although agriculture grew at 2.2 per cent in the second quarter, a recent report of the Centre for Science and Environment said that farmers have lost more than 10 million tonnes of rabi crops, valued at above Rs 20,000 crore, due to unseasonal rainfall and hailstorm in February-April this year.

It said that India may have to import 10 lakh tonnes of wheat in 2015-16, as about 68.2 lakh tonnes were lost due to unseasonal rainfall. It said that while there were areas of robust growth in manufacturing such as capital goods and passenger cars, weak rural and external demand held back stronger overall growth. The RBI in September this year had cut India’s growth forecast to 7.4 per cent from an earlier expectation of 7.6 per cent.