JP Morgan Securities has revised its forecast of the country's gross domestic product (GDP) growth for the current financial year to 5.3 per cent from the earlier forecast of 6.0 per cent due to the sluggish demand in the economy.
The broking firm has lowered its forecast for the financial year 2002-03 to 6.2 per cent from the earlier estimation of 6.5 per cent.
The revision done by JP Morgan is in line with figures published by the Central Statistical Organisation (CSO).
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According to the CSO figures, the economy grew by 5.2 per cent in the last fiscal as against the previous fiscal's growth of 6.4 per cent.
On a year-on-year basis, industrial growth slumped to 1.9 per cent in May compared with 6.0 per cent logged in the previous year.
Finance minister Yashwant Sinha, however, is hopeful of a turnaround by the end of the calendar year helped by stronger demand and an improvement in the global economy. Sinha is in the process of pushing up demand in the economy through 'fiscal pump-priming'.
JP Morgan also hopeful that agricultural and industrial sectors making a turnaround in the second half of the financial year, but said that much depends on proper rainwater distribution from the monsoon throughout the meteorological zones.
The broking firm expects the agriculture sector to post a growth of 2.6 per cent in the current financial year, which will help recovery in industrial activities too. Agriculture output grew by just 0.2 per cent in the last fiscal.
Top officials at the Reserve Bank of India (RBI) are also hopeful of a turnaround in the second half of 2001-02 and expect that the GDP will rise upto around the six per cent level in the current financial year.