Goldman, BofA-ML scale down India’s FY13 growth forecast

GDP estimates revised steeply to 6.6% and 6.5%, respectively

Within days of Morgan Stanley and StanChart revising downwards the country's growth forecasts for the current fiscal, Goldman Sachs and Bank of America-Merrill Lynch on Friday steeply scaled down their GDP estimates for India to 6.6% and 6.5% respectively for 2012-13.

These two revisions are the lowest forecasts yet, as the projection of Morgan Stanley is 6.8% while that of StanChart is at 7.1%, and are drastically lower than the government forecast of 7.6%.

"We are revising our GDP growth forecast for FY13 down to 6.6% from 7.2%, largely due to a weaker investment outlook in part driven by domestic policy uncertainties and more back-ended and lesser monetary policy easing, and in part by prevailing global uncertainties," Goldman Sachs India economist Tushar Poddar said in a note.

Meanwhile, Bank of America-Merrill Lynch India economist Indranil Sen Gupta, pegging the March quarter GDP at 6%, said FY13 growth will just be 6.5% if Greece stays in the euro, and will be sharply lower at 5.5% if Athens decides to dump the European monetary union.

"We cut our FY13 growth forecast by 30 bps to 6.5% from our previous forecast, with the European crisis dragging on more than anticipated. In case of a Greece exit, growth can fall to 5.5%. Meanwhile, March quarter growth would also come in at an anaemic 6%, pulling our FY12 growth forecast down by 20 bps to 6.7% for FY12," Sen Gupta said.

On May 21, Morgan Stanley cut India's growth forecast to 6.8% from 7.5%.

"With policy makers continuing to delay action to address the unsustainable bad mix of growth, we now think that GDP growth is likely to face another leg down. A deeper and longer growth slowdown is up ahead. Accordingly, we expect GDP to decelerate to near crisis level at 6.8% this fiscal," Morgan Stanley managing director Chetan Ahya said.

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