India's FY14 GDP forecast cut to 5.5% by BofA-Merrill Lynch

Bank of America-Merrill Lynch cut India's fiscal year 2013/14 growth forecast to 5.5 per cent of the gross domestic product from 5.8 per cent after the central bank took steps to curb rupee liquidity, it said in a note on Tuesday.

The Reserve Bank of India announced measures late on Monday to curb the rupee's decline by tightening liquidity and making it costlier for banks to access funds from the central bank.

The investment bank said the tightening will push back lending rate cuts.

"We had earlier expected growth to stage a shallow recovery to 5.8 per cent on the back of better rains and lending rate cuts. We have now removed the 30 basis points we had expected from softer rates," wrote analysts at the bank.

Copyright: Thsomson Reuters 2013