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Morgan Stanley cuts GDP growth rate to 5.1%

Global investment bank Morgan Stanley has revised its growth estimate for India's gross domestic product to 5.10 per cent from earlier 5.6 per cent for fiscal 2002-03 in the wake of poor monsoon rain.

Even if the conditions improve during the rest of the monsoon, the damage was irreversible as of July 17, about 65 per cent of cropped area under cultivation had received below normal rainfall, according to a study by Morgan Stanley.

GDP is the total value of goods and services produced in a country during a year.

Kharif output, which accounts for about 12 per cent of GDP, will be affected by poor rainfall and was expected to rise by only 0.5 per cent compared with earlier estimate of 3.5 per cent. Consequently, agriculture output estimate has been revised to 1.9 per cent as against 3.1 per cent earlier.

It would also affect rural consumption in the country and sectors such as consumer non-durables, consumer durables, cement and automobiles were likely to see its impact as they were much exposed to weak income growth of farmers, the study said.

In the absence of structural drivers such as investment in irrigation facilities and improved soil fertility, agriculture output has been very much dependent on the weather. About 60 per cent gross cropped area under cultivation depends on monsoon rains.

This year the monsoon was significantly below normal on all three factors used to measure rainfall i.e. total quantum of rainfall, spatial spreads and temporal distribution.

Rainfall received in the June 1 to July 10 period has been 18 per cent below the long period average which can be classified as worse than normal.

The states that have been affected by poor rainfall are Uttar Pradesh, Haryana, Delhi, Punjab and Himachal Pradesh in north, Rajasthan and Madhya Pradesh in west, Kerala and Tamil Nadu in south and Orissa, the study said.

North India, accounting for 22.5 per cent of the cropped area, has suffered the most as 21.4 per cent of this cropped area received less than normal rainfall, the study added.

UNI

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