India - Goldman Sachs cuts India FY09 growth to 6.7%

MUMBAI: Goldman Sachs on Monday cut its India growth estimate to 6.7 per cent from 9 per cent in the year ending March 2009 due to the knock-on
effects of the global financial crisis.

"The larger-than-expected shock to the financial sector over the past couple of months, and its knock-on effects on both domestic and external demand, are responsible for our lower growth projections," the investment bank said in a note.

It also cut its growth projection for the 2009/10 to 5.8 per cent from 7.0 per cent on concerns negative global financial stocks will continue to slow activities across the board. "We now see further risks to the downside as problems in the financial sector feed through to the real sector," Goldman said.

Analysts at the bank also pointed out that the government will not be able to counter a worsening financial scenario with more measures, as its balances are already stretched. But growth rates are expected to bottom out at a quarterly pace of 5.0 per cent in the April-June quarter of the next fiscal year starting April, supported by the monetary policy stimuli, prospects of a good agricultural crop, lower commodity prices, and infrastructure spending.