NEW DELHI: India's days of more than nine per cent economic growth are over and the country has lost the opportunity to sustain those levels as well, believes global financial services major Citigroup."...the days of 9 per cent plus growth are over and we believe that India has lost the opportunity to sustain those levels for now, and we expect growth to come in around 7 per cent plus levels in FY'2009-10," Citigroup, in its latest economic and market analysis report for India, stated.
The report pointed out that further rate hikes do pose downside risks to Citi's FY'09 and FY'10 GDP estimates of 7.7 per cent and 7.9 per cent, respectively.
Country's industrial growth has plunged 3.8 per cent in May, as compared to 10.6 per cent a year-ago, due to a poor show of manufacturing and electricity sector.
According to government data released today, industrial output, as measured by Index of Industrial Production, grew by just five per cent in the first two months of this fiscal, against 10.9 per cent during the same period last year.
However, in the coming years Citigroup does not expect trends to remain as favourable as the impact of monetary tightening kicks in.
"Our FY'09 and FY'10 GDP estimates of 7.7 per cent and 7.9 pert cent incorporate a deceleration in investments to 10.4 per cent and 7.9 per cent, respectively," Citi economist Rohini Malkani said in the report.
However, if the oil prices continue to face upward review, with the ongoing adjustment in other market determined fuels along with the pass through impact on manufactured products, it would result in edging the inflation even higher, the report added.
This would warrant further tightening, which coupled with increasing input costs, would slow down investments further, Malkani added.
thanks by :- economictimes.indiatimes.com
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