Nomura cuts India's growth forecast to 6%

Mumbai: India's economic growth could slow to 6 percent from 6.3 percent in 2009/10 dragged by contraction in agricultural growth, Nomura said in a recent note.

The government expects Asia's third largest economy to expand by 6.3 percent in the current fiscal year and the central bank sees it growing by 6 percent with an upward bias.

Nomura cut its 2009/10 agriculture gross domestic product (GDP) growth forecast to 2.2 percent from 3.5 percent due to deficient monsoon rains.

"Uncertainty still prevails about the extent of the crop damage and the monsoon season is not over until end-September, so we are reluctant to implement a larger downgrade at this stage, but are mindful that the risks are still on the downside," economist Sonal Varma wrote.

The note also said the impact of the deficient monsoon on agriculture GDP will be visible from the third quarter of 2009 when summer harvesting begins.

However, Nomura said it sees a recovery in manufacturing and consumption sectors.

It raised its industrial GDP growth forecast to 7.3 percent from 4.9 percent and services to 7.9 percent from 7.8 percent earlier.

Hence it has upgraded its 2010/11 growth forecast to 8 percent from 7.5 percent seen earlier.

Last week Morgan Stanley also cut its 2009/10 growth forecast to 5.8 percent from 6.4 percent earlier in anticipation of a drop in agricultural output.