Key reasons for downward revision are prediction of lower-than-normal monsoon for 2019 and continued agrarian distress.
New Delhi: India Ratings and Research on Tuesday marginally lowered country's GDP growth projection for 2019-20 fiscal to 7.3 per cent mainly due to below normal monsoon prediction and loss of momentum in industrial output.
The Fitch group company had earlier projected India's gross domestic product (GDP) growth at 7.5 per cent.
The key reasons for the downward revision are the prediction of lower-than-normal monsoon for 2019 and continued agrarian distress, and the loss of momentum in the industrial output growth, especially manufacturing and electricity.
Besides, the slow progress on cases referred to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, was another reason cited by the company for lowering the growth forecast.
"Inability to bring the stuck capital back into the production process will have implications for investment recovery," India Ratings and Research said in a release.
Investment expenditure growth, as measured by gross fixed capital formation (GFCF), has, therefore, been downwardly revised to 9.2 per cent for 2019-20 from the earlier forecast of 10.3 per cent, it added.
Following the monsoon forecast, India Ratings and Research estimates agricultural gross value added growth at 2.5 per cent (earlier forecast was 3 per cent) for 2019-20 compared with the 2.7 per cent recorded for 2018-19.
The key support to the gross value added growth in 2019-20 is likely to come from services, followed by industry.
The Indian Meteorological Department (IMD) expects the monsoon to be near normal while private weather forecaster Skymet Weather Services expects the monsoon to be below normal in 2019.
According to IMD, the seasonal rainfall is likely to be 96 per cent of the Long Period Average (LPA) with a model error of plus or minus five per cent.
On the prices front, India Ratings and Research expects wholesale and retail inflation to remain benign at 3.4 per cent and 4 per cent in 2019-20, respectively.