Macroeconomic Forecast India

August 2004 | Macroeconomic Forecasts

Poor monsoon rains will weigh down on economic growth during the fiscal year ending March 31 2005 (2004/05), with drought likely to affect the north-western states. Agriculture accounts for just one-fifth of India's GDP but three-quarters of the country's 1bn-plus population depend on it for their livelihood. Deficient rainfall and delayed planting in major oilseed-producing states like Gujarat, Maharashtra and Rajasthan could reduce rural incomes and consumption with far-reaching economic effects. We have cut our forecast for real GDP growth in 2004/05 by one percentage point, to 6.0%. Further revision could follow, as the full extent of the rain shortages becomes clearer.

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