Leading brokerage Credit Suisse on Thursday lowered its forecast for India's GDP growth in the current fiscal year to 5.3 percent from the present 5.7 percent earlier due to ongoing aggressive fiscal tightening.

Research analyst Robert Prior-Wandesforde said, "The ongoing aggressive fiscal tightening, equivalent to more than one percent of GDP in the current fiscal, and another likely squeeze in the order of 0.25-0.50 percent of GDP next fiscal...This larger than previously expected fiscal tightening has, however, led us to further reduce our GDP growth forecasts for the current fiscal to 5.3 percent and to 6.7 percent for next fiscal."

Credit Suisse earlier estimated that India's GDP will grow at 6.9 percent rate in the next financial year.

He also said that these projections are comfortably above the consensus estimates and that he continues to expect a 7.5 percent average GDP reading for FY15.

Last week, the Central Statistical Organization had pegged the GDP growth for the year at a decade low of 5 percent, the lowest since FY02 when the readings came in at a poor 4.7 percent.

He also said that this will further encourage the RBI to cut lending rates and the ratings agencies to leave the sovereign rating unchanged.

"No doubt the government will also be hoping that a Budget incorporating credible tightening measures will persuade the rating agencies to maintain India as an investment grade credit, while encouraging the RBI to cut interest rates further. And therefore, we anticipate another 100 bps in repo rates by the end of calendar 2013," Prior-Wandesforde added.

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