ICRA revises its growth forecast to 5.7% from 6.2-6.4%

MUMBAI: ICRA has revised its growth forecast to 5.7% from 6.2-6.4% for financial year 2013. According to the rating agency, deficient monsoons could have an implication for growth, inflation and fiscal deficit.

The rating agency expects RBI to keep the interest rates unchanged in its mid quarter policy review by RBI. Absence of concrete improvement in investment sentiment, weaker than normal monsoon, an upward revision in the anticipated inflation rate for 2012-13 has prompted the rating firm to lower its growth target for the current financial year.

"The risk of twin deficits has accentuated causing concern for macro-financial stability. With limited fiscal and monetary space available to provide direct stimulus to growth without stoking inflation, an expenditure switching strategy is needed that reduces government's revenue spending by cutting subsidies with a step up in capital expenditure to crowd-in private investment" the RBI said in its annual report for 2011-12.