Credit Suisse lowers FY'13 growth forecast to 5.3%
cent) reductions at both the March 19 and May 3 RBI meetings, with a 50 bps cut in July.
According to the report, the anticipated scale of the fiscal tightening in 2013/14 and, to a greater extent, the second half of 2012/13 is larger than expected and accordingly
the GDP growth projections has been lowered.
It said the Budget 2013-14 is likely to "err on the side of prudence, incorporating a modest tightening of the underlying fiscal stance after a bigger squeeze in 2012/13".
This should help pacify the rating agencies as well as RBI, Credit Suisse added.
A Budget incorporating credible tightening measures will persuade the rating agencies to maintain India as an Investment Grade credit, while encouraging the RBI to cut interest rates further, it said.
Out of the three main rating agencies, S&P and Fitch have India on negative watch, the lowest investment grade among the BRIC group of large emerging economies. A cut would take the country's credit rating to junk status.
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