Global financial major Citigroup has maintained its 7.6 per cent growth projection for the Indian economy in the current fiscal, notwithstanding disappointing industrial production numbers.
Good performance by the farm sector is expected to offset slowdown in the industrial sector, Citi said.
“While continued weakness in industrial production data could add downside risks to our FY’12 industry growth estimate of 6.5 per cent, these may be offset by higher agri growth, thus supporting our FY’12 GDP forecast at 7.6 per cent for now,” Citi Investment Research & Analysis said in its issue of ’India Macro Flash’
Reflecting slowdown, factory output growth slipped to a two—year low of 1.9 per cent in September compared to 6.1 per cent in the same month of 2010.
This is the third consecutive month industrial growth has declined.
During the April-September period of this fiscal, the growth of Index of Industrial Production (IIP) stood at 5 per cent as against 8.2 per cent in the same period last year.
Citi’s 7.6 per cent growth projection is in line with the revised forecast of the Reserve Bank. Last month, the RBI revised downwards its estimates for the Gross Domestic Product (GDP) expansion to 7.6 per cent for 2011-12, down from the previous estimate of 8 per cent, on account of global slowdown and high domestic inflation.
The Indian economy had grown by 8.5 per cent in 2010-11.
During the first quarter (April-June) of the current fiscal, economic growth slowed down to 7.7 per cent, lowest in six quarters.
Citi, however, said that economic growth in 2012-13 will fall to 7.5 per cent.
“Going forward, recessionary global conditions coupled with domestic factors, including the lagged impact of tightening and sluggish reform progress, are likely to result in FY-13 GDP coming in a tad lower at 7.5 per cent,” it said.