Monsoon clouds over growth prospects

Patchy monsoons, global economic uncertainty and a weak rupee could hold back overall economic growth rate, RBI said on Tuesday while slashing India’s gross domestic product (GDP) growth forecast for 2012-13 to 6.5%.

Patchy monsoons, global economic uncertainty and a weak rupee could hold back overall economic growth rate, RBI said on Tuesday while slashing India’s gross domestic product (GDP) growth forecast for 2012-13 to 6.5%.

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In the April policy, RBI had projected GDP growth for 2012-13 at 7.3% on the assumption of a normal monsoon and improved industrial activity, which have not panned as originally anticipated.

“Data on industrial production for April-May suggest that industrial activity, despite some recovery, remains weak,” RBI said in its quarterly review.

“Global growth and trade volume are now expected to be lower than projected earlier. Given the greater integration of the Indian economy with the global economy, this will have an adverse impact on growth, particularly in industry and the services sector,” it added.