Mumbai: Despite the ongoing heavy of rains, most analysts have lowered their agricultural and industrial production estimates due the monsoons having got off to a poor start in July.

The delay in the rains during this month — crucial for agriculture — has already taken its toll on the GDP growth estimates since even the industrial sector, with substantial rural sales is likely to perform below par during the year. "We are lowering our GDP estimates from 7.1 per cent to 6.2 per cent for FY05 and from 7.6 per cent to 7.3 per cent for FY06, owing to weak monsoons," say analysts from Merrill Lynch.

The current burst of rains is unlikely to make up for the crop losses suffered by farmers, especially for crops sown in June 2004, they said. This, in turn, will lead to low rural demand for industrial products.

The impact on industry is likely to be more pronounced in FY06. This is because the higher industrial growth was based on a turnaround in the investment cycle, supported by rising infrastructure spending and a capex recovery. "We expect the weak rural demand to further push back the proposed capex plans of companies, resulting in lower industrial growth," say Merrill Lynch analysts.

The overall level of rainfall continues to be 10 per cent below normal as of August 4, 2004.However, for the week of August 4, rainfall was 20 per cent above normal. If monsoons remain on track from now on, the season could end with total rainfall being only 5-6 per cent below normal. Consequently, the agriculture sector is likely to show a negative growth against the earlier estimates of 3 per cent growth.

Most analysts have cut their industrial production and services growth forecasts to 7.4 per cent (from 7.6 per cent earlier) and 8.4 per cent (from 8.6 per cent earlier), respectively. The geographical spread of rainfall is skewed with some major agricultural belts like western UP, Haryana and Punjab receiving deficient rains, Bihar is reeling under floods. The only hope is that the 'rabi' (winter) crop, which now accounts for almost 50 per cent of annual crop output, will be normal, with better winter rains.

"Hence, in our estimates, combined output for 'kharif' and 'rabi' crops could be flat to marginally lower (-0.5 per cent) in FY05 compared to consensus estimates of minus 1 per cent to 3 per cent," analysts said.