M.Stanley cuts India growth forecast to 5.1 pct in FY13

MUMBAI Mon Sep 3, 2012 1:28pm IST

1 of 2. People carry vegetable bags at a wholesale vegetable market in Ahmedabad August 14, 2012.

Credit: Reuters/Amit Dave

Related Topics

MUMBAI (Reuters) - Morgan Stanley cut India's economic growth forecast to 5.1 percent on Monday, the lowest among most private forecasters for the 2012/13 fiscal year, citing a combination of weak external demand, low private investment and poor government finances.

The U.S. investment house had previously projected Asia's third largest economy to grow 5.8 percent in the year ending March. It also reduced its estimate of GDP growth for 2013/14 to 6.1 percent from 6.6 percent.

Economists of Citi, CLSA, CRISIL have also scaled back India's GDP forecast last month.

Economic growth languished near its slowest in three years in the quarter that ended in June but was slightly better than expected at 5.5 percent, provisional data released on Friday showed.

High fiscal deficit, strong wage growth in rural areas and a decline in private investment is leading to "stagflation-type environment", Morgan Stanley said in a report.

"In the event of continued inaction from the government, we see very high risk of a potential deeper macro stress scenario," Morgan Stanley said, warning that policy sluggishness could push growth further down to 4.3 percent in the current fiscal year.

In July, RBI revised GDP growth projection to 6.5 percent for 2012/13 from 7.3 percent estimated in April.

(Reporting by Suvashree Dey Choudhury; Editing by Sanjeev Miglani)

FILED UNDER:

Reuters Showcase

GDP Growth

GDP Growth

India revises up 2013/14 GDP growth to 6.9 percent.  Full Article 

Pharma Deal

Pharma Deal

Sun Pharmaceutical wins U.S. approval to buy Ranbaxy  Full Article 

Adani Restructuring

Adani Restructuring

Adani hives off power, ports businesses to boost growth.  Full Article 

Bank of Baroda

Bank of Baroda

Q3 net profit down 69 pct on higher provisions  Full Article 

Trading Fees

Trading Fees

BSE slashes fees in FX derivatives battle with NSE  Full Article 

SpiceJet Turnaround

SpiceJet Turnaround

SpiceJet board approves up to $243 mln share sale plan  Full Article 

Currency Market

Currency Market

RBI urges companies to hedge FX exposure  Full Article 

Banking Sector

Banking Sector

Banks say no room to cut lending rates, thwarting RBI easing  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage