Morgan Stanley has lowered India's GDP growth forecast for 2013-14 to 6 per cent,
citing challenging domestic and external environment and lower-than-expected expansion logged in the last quarter.
The global firm had earlier estimated a 6.2 per cent growth for the country for FY14.
FROM THE MAGAZINE: Growing skill gap holding back the economy"We have reduced our GDP growth forecast for FY2014 to 6 per cent from 6.2 per cent earlier to reflect lower-than-expected GDP growth for the quarter ended December 2012 and the still-challenging
domestic and external environments," Morgan Stanley Economist Chetan Ahya said in a research note.
The global financial services player, however, expects a gradual recovery.
The Indian economy grew by 4.5 per cent in the October-December period of the current financial year, pulled down by poor performance of farm, manufacturing and mining sectors.
GDP growth bottomed out in the quarter ended December 2012 and going forward the country is likely to see an improvement in agriculture growth, a slight
pick up in export growth that also supports manufacturing and trade services.
MONTEK SPEAK: 'We need to bring in some rationality' "Some of the other factors that would help in healing the economy include moderation in inflation and further gradual monetary easing and continued policy measures from the government, which should help stabilise private capex as a percentage of GDP," Morgan Stanley said.
"Taking into account these factors, we are currently building in a gradual
recovery in GDP growth in FY2014 to 6 per cent (while lower than our earlier estimate of 6.2 per cent) as compared to our estimate of 5.1 per cent for FY2013," the report said.
Indian economy is estimated to have grown 5 per cent in 2012-13. The Finance Ministry's Economic Survey of 2012-13 has predicted a growth rate of 6.1-6.7 per cent for the next fiscal.
"We believe that the initial phase of recovery will be driven by an improvement in productivity growth rather than a big rise in investment to GDP. We expect the government to continue to take policy measures that will slowly improve productivity and the growth mix," the report added.
With inputs from PTI
PHOTO: AP 
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