UBS raises India's GDP forecast to 6.2 pct

Mumbai: India's economy may grow 6.2 per cent in 2009/10, UBS said in a report, revising its estimate from 5.2 per cent, citing lower interest rates, smaller excess capacity and a fall in risk aversion.

The central bank has forecast growth at about 6 per cent.

"The main reason for this is a more resilient consumer," UBS economist Philip Wyatt said in a research note.

"A full-blooded recovery in fixed investment would need stronger profits, whereas consumption can benefit earlier from lower interest rates once confidence recovers," he wrote.

Industrial output could pick up in a limited way to 5-8 per cent in the fiscal year ending in March 2010, from 2.4 per cent in the past year but move decisively above 10 per cent in 2010/11, UBS said.

Exports may remain slow for most of 2009/10 and said the global economic growth would act as a "speed limit" for a return to 9 per cent gross domestic product (GDP), UBS said.

"We see 2009/10 as a stabilisation year for real GDP, followed by a return closer to potential growth of 7-8 per cent growth in 2010 as global economic activity picks up," it said.

The central bank projected GDP growth to be 6.5-6.7 per cent for the 2008/09 fiscal year. In the previous three fiscal years, the economy expanded at or more than 9 per cent.