Morgan Stanley raises India's GDP forecast to 5.4 pc for FY13
policy reforms supporting investment outlook; government's effort on fiscal deficit management and rural wage growth.
Some other factors that could affect these projections include external demand; trend in capital flows; and global crude oil prices.
Over the past two months, co-incident indicators of consumption - such as auto sales and consumer non-durables production - have shown signs of stabilisation and India's exports have improved on a seasonally adjusted month-on-month (MoM) basis.
However, the persistent weakness in the investment cycle has been the most important factor keeping growth at low levels in the current cycle, Morgan Stanley said.
On the policy front, the report said the RBI may start the easing cycle in the first quarter of 2013 and policy easing could be limited to about 75 bps in 2013.
"We believe that even as inflation starts to ease from 1Q2013, it may remain above the RBI's comfort zone for longer.
Hence, we expect policy easing to be limited to about 75bps in 2013," the report said.
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