Market outlook: 'Growth in emerging markets may be better than developed world'
With regards to India, the report said investors remain "concerned" about fiscal slippage.
Moreover, there are now heavy economic and political pressures for the Indian government to deliver on the reform front, but the "political reality in India will continue to make reform impractical," it said.
"Getting agreement by both the lower and upper houses may be even harder than getting agreement between the House and Senate in the US," the report added.
In addition, due to the inelastic demand for gold and oil and the appreciation by these commodities is likely to put more pressure on the current account deficit.
"We continue to be enthusiastic about the opportunity suggested by India, but we remain frustrated by the political and bureaucratic quagmire that inhibits its realisation," the report said.
Rating agency Fitch this month had warned of a downgrade in India's sovereign rating in the next 12-24 months citing slowing GDP growth and weak public finances.
In April and June last year, another rating agency S&P, had warned of further downgrades, which would put India into a junk status from the current lowest investment grade rating of BBB-.
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