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Jul 12, 2012, 08.23 AM IST
Indian economy could see a slower growth at 5.6-6% in the current fiscal if the monsoon remains poor, global financial services major Citi has said. The estimate is much lower than Citi's earlier growth projection of 6.4% for India, which saw its economic expansion touch a nine-year low of 6.5% last fiscal.
"A poor monsoon could result in GDP coming in at 5.6-6%," Citi said in a report yesterday. The cumulative rainfall in June was about 30% lower than normal. "Despite the changing composition of GDP (share of agri at 15% against 30%) and mitigating factors such as NREGA, growing share of winter crop, use of gold as collateral, the economy is not yet water-proof," the report
About 50% of workforce are into agriculture and only 36% of the country's land is irrigated. After clocking 8.4% growth for two consecutive financial years, Indian economy expanded just 6.5% in the last fiscal.
"As is well known, the interplay of the four deficits (current account, fiscal, liquidity and governance) has taken its toll on the India story with growth slowing to a nine-year low," Citi said. According to the report, small fuel price hikes, coupled with measures that are largely execution in nature, could
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