New Delhi: Global financial giant HSBC on Thursday lowered India's growth forecast for this fiscal year to 5.5 percent from 6 percent citing slow reform process.
HSBC said growth has been in line with its expectations in 2013, but slower reform progress will delay the recovery.
"While we expect further progress on reforms, it will only materialise slowly. Moreover, the global recovery is likely to come later. The recovery in India will, therefore, prove even more protracted," HSBC said in a research note.
HSBC has, consequently, cut growth forecast for FY2014 to 5.5 percent (vs 6 percent) and FY2015 to 6.6 percent (vs 7.1 percent), the note said.
India's economic growth rate slipped to a decade low of five percent in 2012-13 on account of poor performance of farm, manufacturing and mining sectors.
The government has pushed through numerous reform measures over the past nine months. However, implementation and announcements have tapered off recently and could slow even further, it said.
"This monsoon parliamentary session will prove an important test for the government's ability to sustain the reform push," HSBC said.
There are a number of key bills like -- land acquisition bill, insurance bill, pension bill -- that are likely to be voted on during the monsoon session of Parliament that starts in July/August.
On the inflation front, HSBC said the decline in global commodity prices is likely to continue in the near term, but, in the second half of the fiscal year, inflation is likely to gradually pick up, as growth recovers and global commodity prices firm.
The report further said though the fiscal deficit has came in below 5 percent of GDP last fiscal year and the trade balance has improved. The fiscal deficit is not likely to narrow further in FY2014, on account of both revenue and expenditure slippage.
"While we forecast the current account deficit to narrow in coming years, it will remain elevated and a concern," HSBC said.
First Published: Thursday, June 13, 2013, 17:32