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CRISIL cuts Indian GDP growth forecast to 7.6pct

For the second time in 2011, credit rating agency Crisil has trimmed India's GDP growth forecast for FY 2012 to 7.6% from its earlier estimate of 7.7% to 8%.

It may be recalled that it had earlier estimated GDP growth at 8.5% for 2011-12 and, subsequently, lowered its estimate to 7.7% to 8% in May 2011.

According to a release from Crisil, it has scaled down its forecast in view of the deteriorating global economic scenario and the grim investment climate in the country on account of the policy environment.

Acknowledging that it had anticipated the impact of rising interest rates and slowing government expenditure, Ms Roopa Kudva MD & CEO of Crisil Limited said that the deceleration in advanced countries had been sharper than expected, which, in conjunction with the weak investment climate, was impacting the country's GDP growth prospects. She said that "We now project the economy to grow at 7.6% in 2011-12."

While the report estimates export growth to be moderate in the next few months owing to dwindling growth in the key export markets, it also states that the depreciation of the rupee is likely to push up the imported component of inflation, at least temporarily, besides offsetting the positive impact of a fall in commodity prices, including oil.