New Delhi : A better-than-expected monsoon and sowing turnout in June have raised hopes of further rate cut by the Reserve Bank, which is likely to help economy grow at 7.4-7.6 % in FY16, ratings agency ICRA said.
Following bouts of rainfall during pre-monsoon period, the surplus monsoon rainfall in June has encouraged early sowing of crops and quelled fears that had arisen when the India Meteorological Department forecast a deficient monsoon for 2015, it said. As of June 26, the area sown under kharif crops was 23 % larger than the year-ago period. “Nevertheless, only around one-fourth of the total area covered under kharif planting in 2014 was sown by the end of June 2015. Accordingly, rainfall dynamics in the remainder of the monsoon season would continue to impact the sowing pattern and eventual crop yields,” said Aditi Nayar, Senior Economist at ICRA Ltd.
However, the recent improvement in growth recorded by the Index of Industrial Production, core sector and various services sector indicators related to air traffic and cargo handled at ports are encouraging, said the ratings firm. It also said the ongoing Greece crisis and rate hikes by the US Federal Reserve may impact foreign exchange rates, however, the rupee may only have limited vulnerability within emerging market currencies.
