Crisil cuts India's GDP growth forecast to 7%

Ratings agency Crisil on Thursday loweredits growth forecast for the Indian economy in 2011-12 to 7 per cent, from theearlier estimate of 7.6 per cent, due to global slowdown and weak domesticinvestment climate.

"Crisil Research has lowered India's Gross DomesticProduct growth forecast for 2011-12 to 7.0 per cent from its October estimateof 7.6 per cent," the ratings firm said in a report.

"The forecast has been scaled down, in view ofdeterioration in the global economic outlook led by the Eurozone recession, aweaker-than-anticipated domestic investment climate and limited fiscal space tostimulate the economy," it added.

Crisil said said economic growth in the second half(October-March) of the current fiscal is likely to slip to 6.7 per cent, from7.3 per cent in the first six months.

"This will restrict the overall GDP growth for 2011-12at 7 per cent. This would be the second-lowest growth in the past nine yearsafter 6.8 per cent in 2008-09, during the peak of global financialcrisis," the report said.

The country's Gross Domestic Product (GDP) growth slipped to6.9 per cent in the second quarter, the lowest in over two years.

The economic growth in 2010-11 stood at 8.5 per cent. Growth in eight core infrastructure industries dipped to 0.1per cent in October, the lowest in five years.

RBI has already revised its growth projection for the Indianeconomy to 7.6 per cent, from 8 per cent earlier.

Finance Minister Pranab Mukherjee said last week that GDPgrowth in the current fiscal is likely to be around 7.5 per cent, far below the9 per cent projection made by the government in its pre-Budget survey.

"The industry growth will remain constrained by laggedimpact of RBI's interest rate hikes, weak exports due to slipping demand,particularly from Europe and growing bottlenecks in the mining sector,"Crisil said.

RBI has already hiked its key-policy rates 13 times,totalling 350 basis points, since March 2010 to tame demand and curb inflation.

India Inc has blamed the repeated rate hikes, which have ledto increased cost of borrowings, for hindering fresh investments and slowingdown industrial growth.