The Centre for Monitoring Indian Economy has scaled down the country's GDP growth projection to 5.8 per cent from the earlier 6.6 per cent, largely blaming the weak monsoon. Its forecast almost exactly matches that of global investment banking firm Goldman Sachs Group, which released a similar report on Monday.
The think-tank estimates the country's real GDP to have grown by just 4.7 per cent in the quarter up to June, compared to 5.8 per cent in the preceding quarter and 7.8 per cent in the same period a year ago.
All the three major sectors - industry, agriculture and service - suffered from the economic downturn. Delayed and scanty rain has staggered agricultural activities, leading to a contraction of 2.8 per cent in the agricultural and allied sectors in the first quarter of 2009-2010. CMIE said production of sugar and edible oils would fall by 3.6 per cent and 2.5 per cent, respectively.
Growth in the manufacturing segment was estimated at a mere 0.9 per cent, but higher growth in the mining and quarrying and construction segments pushed up growth in industrial production to 2.6 per cent, CMIE estimated.
Weak growth in trade, hotel and transportation activities is likely to have restricted the growth in the service segment to 8 per cent in April-June 2009, compared to 10.2 per cent, said the report released in Mumbai on Monday.
Sugar prices to push up inflation
CMIE also said the average inflation in the current fiscal would be around 0.5 per cent, considerably higher than the earlier projection of 0.1 per cent.
The upward revision is mainly on account of a spurt in the prices of sugar, khandsari and gur, the report said, adding the upward revision is sharp, yet negative as compared to the 8.3 per cent average inflation recorded in the last fiscal.