Deficient monsoon, global economic slowdown has on Tuesday led the Indian credit rating agency Crisil prune country’s economic growth forecast for current fiscal to 5.5% from 6.5% as the agency had estimated earlier.
The agency also expects the average Wholesale Price Index (WPI) inflation to be higher at around 8% as against 7% estimated earlier.
As per the IMD data, the rainfall was expected to be deficient by 15% for June-September 2012. The Standard & Poor’ s has recently lowered the Eurozone growth forecast to 0.6% from flat growth estimated earlier.
The RBI in its quarterly monetary policy last month had lowered the growth forecast for current fiscal to 6.5% from 7.3%.
Crisil, in its report India: Macroeconomic Outlook Revision 2012-13, said the average WPI inflation in the current fiscal would be higher at 8% on account of adverse impact of deficient monsoon on food inflation.
It also expects the fiscal deficit to surge to 6.2% of gross domestic product (GDP) in 2012-13 from its earlier estimate of 5.8%.
The report said “the increase in the fiscal deficit largely reflects lower revenue growth as a result of slowing GDP growth.
In case of a substantial fiscal stimulus to the economy the fiscal deficit to GDP ratio could worsen further.”
The Centre’s fiscal deficit ballooned to 5.76% of GDP in the last fiscal on account of high fuel subsidy outgo. The government has not been able to decontrol diesel prices even after taking in-principle decision.