India growth forecast slashed: CRISIL

August 9, 2012

Rating agency CRISIL has slashed India’s growth forecast to 5.5%. It is the second cut for fiscal 2013 estimate. Earlier, the agency had cut GDP growth to 6.5%.
Deficient rainfall and worsening Eurozone situation are the main causes behind the decline.
As per CRISIL, the sluggish growth is expected to put pressure on government finances. Fiscal deficit may also expand to 6.2% of GDP in 2012-13 from the previous estimate of 5.8 %.
As per the agency the Indian govt may see a dilemma on whether to provide a stimulus or not because if it infuses the economy with stimulus then along with some boost to growth its fiscal deficit will soar further.
Likewise, high inflation will be another hindrance to the RBI in aggressively cutting rates to stimulate the economy.