Monsoon woes makes Citi lower GDP growth to 5.2 pc
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Last Updated: Thursday, July 23, 2009, 21:34
New Delhi: Deficient monsoon has prompted financial major Citigroup India to revise its growth forecast for the country from 6.8 per cent to 5.2 per cent.

"Our base case GDP of 6.8 per cent in FY'10 could moderate to 5.8 per cent or in a worse case to 5.2 per cent levels depending on the extent of damage," Citi economist Anushka Shah said in a report.

Given that rainfall has a high correlation with agriculture (0.64) and private consumption (0.55), a poor monsoon or a drought (classified as rainfall deficiency of more than 25 per cent) would impact headline GDP, Shah said.

After four consecutive years of a good monsoon and robust agricultural growth, rainfall in 2009 began on a weak note, with 48 per cent deficiency in June - the driest in over 15 years.

While trends in July have improved, on a cumulative basis monsoon is still in the red (minus 27 per cent), she said.

The situation is further exacerbated by low reservoir levels and water tables, decrease in summer crop sowing (down 8.5 per cent), and a growing El Niño threat, which could mean pre-mature monsoon withdrawal, she added.

Bureau Report

First Published: Thursday, July 23, 2009, 21:34

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