Icra lowers GDP growth forecast to 5.4%

"A weaker rupee and a generalisation of inflationary pressures related to high food prices would result in core inflation remaining firm," it said.

The macroeconomic situation remains clouded despite the recent reform measures, Icra said. "Although measures such as the revision in diesel prices and easing of norms for foreign direct investments in various sectors initiated since September have boosted sentiment and strengthened the rupee, the currency has weakened sharply in the past month, adding to macroeconomic uncertainties."

The report further said the poor monsoons will affect agriculture growth and it is likely to be low in the second half.

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