 "Icra revises down FY14 growth forecast to 5.4-5.6%")
"ICRA cuts India's real gross domestic product (GDP) growth forecast for 2013-14 to 5.4-5.6% from 5.8-6.0%," it said in a note.
The revision comes within days of Icra's parent company Moody's ratings warning that the recent slide in the rupee can affect the country's sovereign rating.
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Some analysts are pegging growth to go back to the 5% level observed in the previous fiscal, which was a decade low. Prime Minister Manmohan Singh had recently said that it will be difficult to meet the target of 6.5%.
Icra said the revision is the result of a weaker-than-expected performance of the factory output in April-May 2013 and merchandise exports in Q1FY14, as well as the weak monetary policy easing and transmissions.
It said the RBI will opt for holding the rates at its forthcoming review on July 30 because of the volatility in the rupee.
"We expect the RBI to keep the repo rate and the cash reserve ratio unchanged in the upcoming policy review, to guard against further rupee depreciation," Icra said in a statement issued today.
The ratings agency said the rupee volatility has "emerged as a key factor influencing the Reserve Bank of India's (RBI's) actions" because of its implications for macro-economic stability.
Even though the RBI has taken a pro-growth stance in its monetary stance for close to a year now, but surprised by announcing a slew of liquidity tightening measures last week to arrest the slide of the rupee, which has lost up to 12% this fiscal.