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Credit ratings agency CRISIL on Wednesday cut India's economic growth estimate to 4.8 per cent for the current financial year and said agriculture was the only hope for a higher rate of expansion in this period of downturn. Its earlier gross domestic product (GDP) estimate for 2013-14 was 5.5 per cent.
The agency also warned the government of overshooting the fiscal deficit target of 4.8 per cent due to poor revenue growth and pegged it at 5.2 per cent this financial year.
"GDP growth for FY14 will come at a decadal low of 4.8 per cent because of the host of issues we are facing," Managing Director and Chief Executive Roopa Kudva said.
"I think we are at the bottom but a rapid recovery from here is unlikely. It will be an L-shaped recovery here on." Kudva said that agriculture, on good rains, held the potential to push the overall GDP growth number to up to 5.2 per cent.
"We are expecting agriculture to grow by 4.5 per cent this fiscal, which is double that of last year. However, if this number goes up to 6 per cent, the overall GDP growth will get pushed to 5.2 per cent," Kudva said, adding that rural consumption will also be a big push for growth.
Crisil expects tractor sales to grow 16-18 per cent as against last year's de-growth of 2 per cent and two-wheeler sales to go up to 4-6 per cent as against the 2.9 per cent last fiscal. The economy grew by 5 per cent in 2012-13 driven down by a slew of factors such as weak external demand, expenditure cuts by the government to meet the fiscal deficit targets, dip in agricultural growth due to poor monsoons, high interest rates and a perceived policy paralysis.
A widening Current Account Deficit, which touched an all time high of 4.8 per cent in the previous fiscal, has resulted in a dip of over 20 per cent in the rupee this fiscal, which only compounds the worries on the growth front.
