ICRA lowered its growth projection to 6.3 per cent for the current fiscal from its earlier forecast of 6.5-6.7 per cent, mainly on apprehension of a decline in farm output by 1 per cent.
"Combined with an expected decline of one per cent in agricultural GDP, the current fiscal year should yield growth of 6.3 per cent, with non-agricultural sector expanding by 8.4 per cent," ICRA said in its report 'Money & Finance'.
The industry is expected to record 7.6 per cent growth in 2004-05 while the services sector would register 8.8 per cent, it said.
Manufacturing sector is expected to post 8.0 per cent growth, it said referring to robust growth in non-food credit in the first half of this fiscal.
On farm sector, ICRA said, "It is reasonable to expect kharif crop to be lesser than last year and even if rabi crop does well, on the aggregate some contraction in the overall GDP arising from the sector for the full year is very likely."
Although the growth projection of 6.3 per cent for 2004-05 is much lower than 8.2 per cent of last fiscal, ICRA said, in the medium term strong probability exists for acceleration of growth from 6-6.5 per cent to 7-7.5 per cent if investment and employment friendly policies continue.
"If our forecast for 2004-05 turns out to be tolerably accurate, then in 2005-06, overall GDP growth should rise to 6.8 per cent," ICRA said.