"GDP growth will remain in a 4.5-5 per cent range for muchof 2014, due to the ongoing fiscal and monetary policy tightening," Japanese brokerage Nomura said in a report.
"The year 2014 is likely to be a year of consolidation and although the investment downturn appears to be coming to an end, we do not yet see any triggers for a revival," the reportsaid.
The GDP growth in the first two quarters of FY14 stood at4.4 per cent and 4.8 per cent, respectively.The economic growth slowed to a low of 4.5 per cent inFY'13 on account of mostly local factors such as high interestrates.
Finance Minister P Chidambaram in his interm Budget,presented last week, said he expected growth in FY'14 to be at4.9 per cent, similar to the advance estimate given by theCentral Statistics Office.
While he pushed Rs 35,000 crore of oil subsidy payments tonext year in the interim budget, the Finance Minister also cutplan expenditure by Rs 75,000 crore to meet the fiscal deficittarget which he finally brought down to 4.6 per cent from theplanned 4.8 per cent.
According to the agency, this cut back on governmentspending will negtively impact growth.
Another growth impediment is the high interest rates,which a hawkish central bank has increased three times or acumulative 75 bps in the past five months.
Nomura said the slowdown in domestic consumption wasoffsetting the better performance of net exports. The reportsees growth to pick up in 2015 on account of higherinvestments and inflation easing out.
"A revival in the capex cycle and a sustained moderationin inflation are pre-conditions to an economic rebound, whichwe see as more likely in 2015," Nomura said.
Meanwhile, rating agency Icra said it expects GDP growthto improve to 5-5.5 per cent in FY15 on factoring in a normalmonsoon, higher manufacturing growth and a pick-up ininvestment activity in second half of the fiscal.