India Ratings today scaled down its GDP growth forecast for this fiscal by 20 basis points to 7.5 per cent, citing lower agriculture output due to deficient rainfall.
The rating agency had earlier forecast a GDP growth of 7.7 per cent.
The World Bank had yesterday retained GDP growth forecast of 7.5 per cent for FY16.
“The downward revision in forecast is primarily due to the lower agricultural growth following the deficient rainfall in many parts of the country,” India Ratings chief economist DK Pant said here.
Monsoon rains have been 14 per cent lower than the long period average, as per the Met department.
He said said although the farm sector has over the years become more resilient to monsoon shocks, output in large parts is still dependent on rains.
However, he said the encouraging part is the sowing of kharif crops, with the total area sown under kharif crops till October 16 reaching 103.88 million hectares, up from 102.66 million hectares for the same period in 2014.
Rice has been sown in 37.82 million hectares (down 0.4 per cent y-o-y), pulses in 11.56 million hectares (up 12.5 per cent), coarse cereals in 18.61 million hectares (up 2.3 per cent), oilseeds in 18.52 million hectares (up 4 per cent) and sugarcane in 4.88 million hectares (up 0.2 per cent).
Pant said despite unforeseen supply-side shocks to select agricultural commodities, overall inflation will remain benign in this fiscal.
The ratings agency expects the average wholesale and retail inflation to come in at negative 1.5 per cent and negative 4.8 per cent respectively, in 2015-16 as against 2 per cent and 5.9 per cent respectively last fiscal.
“Although a second successive year of deficient rains could have an adverse impact agricultural output, the first advance estimates peg foodgrain production to be higher than last year’s,” Pant said.