The National Council of Applied Economic Research (NCAER) on Thursday lowered the GDP projection for the current fiscal to 4.7-4.9 per cent due to exchange rate depreciation.
"GDP growth rate for 2013-14 based on quarterly and annual models point to a GDP (Gross Domestic Product) growth of 4.7–4.9 per cent," the economic think-tank said in a release.
Earlier in November 2013, NCAER had lowered the growth projection to 4.8-5.3 per cent for 2013-14 from its previous forecast of 5.9 per cent.
"Even though we have seen better rainfall, baseline oil price has increased by one per cent...earlier we had assumed 9.5 per cent depreciation in the exchange rate on a y-o-y
basis. But now we have assumed exchange rate depreciation to be 11 per cent. This makes a significant dent to growth of GDP," an economist with the organisation said.
The Central Statistics Office (CSO) under the Ministry of Statistics and Programme Implementation will release advance estimates of economic growth 2013-14 on Friday.
For the next fiscal year 2014-15, NCAER has projected growth rate at 5.6 per cent. The think-tank said the wholesale price index based inflation is expected at 6.2-6.4 per cent during the current fiscal, while the fiscal deficit is estimated at 5.1 per cent of the GDP.
Further, it revised the 2013-14 growth projection for industry to 1.6 per cent, while for 2014-15 it is projected to see an upward trend to 3.8 per cent.
"Services sector has not been immune from the overall slowdown. However services exports may prove an exception mainly due to expected growth in demand of IT services in the west. In 2014-15, the services sector growth is projected at 5.6 per cent," NCAER said.
Public finances continue to be in disarray with the fiscal deficit touching 94 per cent of the target of Rs 5.42 lakh crore for the year by November 2013.
"Faced with the prospects of breaching the fiscal deficit target of 4.8 per cent of GDP for 2013-14, the Finance Ministry is expected to take all possible combat measures
including cutback on plan expenditure; offloading stake in various profitable companies; pitch in by PSUs and possibility of deferred payments to meet the FD/GDP target," it said.
The think tank said that the overall fiscal deficit in 2013-14 may be slightly higher than the budgeted 4.8 per cent due to slower economic growth.