Buoyed by the 'feel good factor' in the economy, investment banking firm DSP Merrill Lynch on wednesday raised India's GDP forecast for 2003-04 to 7.3 per cent from the earlier prediction of 6.7 per cent.

"We are raising our growth forecast for 2003-04 to 7.3 per cent (from 6.7 per cent) and for 2004-05 to 6.5 per cent  (6.3 per cent) on the back of higher growth expectations in the industry and agriculture, and consequently services," DSP Merill Lynch said in a release.

India's Growth Projections for 2003-04

The investment banking firm also raised the IIP (Index of Industrial Production) growth predictions for the 2003-04 and 2004-05 to 6.1 per cent (from 5.3 per cent) and 6.6 per cent (from 6.3 per cent) following stronger-than-expected growth in first half of the current fiscal.

It also raised the agricultural growth forecast for 2003-04 to 7.5 per cent (6.5 per cent) on account of much higher growth in farm production.

DSP Merrill Lynch said services sector is estimated growth estimates to 7.7 per cent from 7.5 per cent for 2003-04 and to 8.2 per cent for 2004-05 (from earlier forecast of 7.9 per cent), on account of higher SME activity following better-than-expected IIP growth and likelihood of enhanced spend on the highway project.

The deceleration of GDP forecast for 2004-05 GDP to 6.5 per cent was largely due to an expected slowdown in agricultural growth to 1.8 per cent, given the uncertainty of monsoons.