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:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
Arajulu wrote:
Of the three growing economies in the world – India, China and Brazil, we have more advantage such as geographical location, communication skills, human resources, infrastructure facilities etc. But unfortunately, we are unable to exploit these advantages. The corruption and the wide publicity about it are keeping the FDIs away from investing. Most of them are preferring China as the Govt. there is industry and investor friendly. These factors add for the lowering of growth rate of India. Unless, stern action is taken and corruption controlled, we can not achieve the targeted growth.

Sep 03, 2012 3:59pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

India-WTO Standoff

India-WTO Standoff

India threatens to derail WTO deal, prompts angry U.S. rebuke  Full Article 

Economic Pulse

Economic Pulse

New govt promises low and stable tax regime for economic revival.  Full Article 

IPO Probe Ends

IPO Probe Ends

Facebook says SEC's IPO probe ends, extending WhatsApp closing date  Full Article 

World Stocks

World Stocks

Goldman Sachs downgrades stocks to neutral for short term  Full Article 

Disappointing Results

Disappointing Results

Amazon's far-reaching ambitions, lack of profits, unnerve investors  Full Article 

Global Growth

Global Growth

IMF cuts outlook, warns of stagnation risk in rich nations  Full Article 

Market Eye

Market Eye

Nifty retreats from record highs on profit taking.  Full Article 

Waning Enthusiasm

Waning Enthusiasm

Markets' post-election enthusiasm lost on consumers.  Full Article 

Reuters India Mobile

Reuters India Mobile

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