Economy is poised to grow by 6.5 to 6.9 per cent in this fiscal following a good monsoon and an expected robust 9.0 per cent growth in agriculture, ICRA said on Monday.
"Excellent monsoon and a likely new record agricultural output, fiscal year 2003-04 appears set to clock growth well in excess of 6.5 per cent. Perhaps approaching 6.9 per cent, the increase contributed by a very sharp increase in agriculture GDP by as much as 9.0 per cent," ICRA said in its report 'Money & Finance' released in New Delhi.
ICRA revised upward its own growth target to 6.9 from 6.0 per cent based on good monsoon followed by record harvests.
Expecting a record kharif crop at 110 million tones along with better oilseeds, sugarcane and cotton output, ICRA also said the country is poised to post a record rabi harvest.
The rating agency, however, pegged growth of non-agriculture sector at 6.4 per cent with growth in industry and services slowing down a bit this fiscal.
Industry is slated to grow by 5.8 per cent this fiscal compared to 6.0 per cent in 2002-03, ICRA said.
ICRA attributes the slower growth in industry to depressed growth in mining and quarrying, gas, electricity generation and water supply sectors.
With better corporate results and surge in domestic and international demands, ICRA said "it is most likely that manufacturing output growth will continue to be strong for the rest of the current fiscal."
Industrial growth would be somewhat dampened by the lower growth in electricity generation.
"Excellent monsoon this year made for a cooler summer and rain soaked fields, hence less power demand for air-conditioners and irrigation pump sets. Some improvement in curbing power theft across the country has also brought down the demand," ICRA said.
Services sector is likely to post 6.7 per cent as against 7.1 per cent last fiscal, it said.
ICRA expects exports growth to come down to below 10 per cent from 22 per cent last fiscal while growth in imports would be sustained on account of demand from manufacturing intermediates, consumer and capital goods.
Import growth would also be compounded by the weaker dollar, it added.
Balance of payments position based on merchandise trade would be less than $20 billion while current account deficit would be around $2.0 billion this fiscal compared to 4.7 billion dollars last fiscal.
Inflation rate is expected to average at about 5.0 per cent this fiscal, it said, adding, "the continued strength of manufacturing inflation in the current period indicates an adequacy of domestic demand."