Bank of America Merill Lynch (BofA-ML) has
lowered India's GDP growth projection yet again, saying the economy will expand at 5.8 per cent during the current financial year in view of tight liquidity and slow industrial recovery.
The brokerage firm had in March revised the growth estimate down to 6 per cent.
"With tight liquidity delaying lending rate cuts and by extension, industrial recovery, we have marginally pared our growth forecast to 5.8 per cent from 6 per cent earlier in FY14 and 6.8 per cent from 7.2 per cent in FY15," BofA-ML economists said in a note.
The brokerage has also lowered the growth forecast for 2014-15 to 6.8 per cent.
The note comes within two days of release of official data confirming that the GDP expansion came in at a 10-year low of 5.02 per cent in 2012-13.
BofA-ML expects a "shallow recovery" in growth only in the second half of the current financial year and added that lending rate cuts hold the key for the revival.
"Given that neither the global business cycle is likely to turn nor capex set to turn around, recovery will pretty much depend on rains and lending rate cuts," it said.
The report said lending rate cuts have the potential to take the growth to the 6 per cent level and added that "we should
monitor the rate cuts for recovery".
The government's economic survey expects growth to come in between 6.1-6.7 per cent cent for the current financial year, while the Reserve Bank of India pegged it at 5.7 per cent.
With inputs from PTI 
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