India may grow at 7.4% in FY16, 7.7% in FY17: BofA

India will grow at 7.4% in FY16 and at 7.7% in FY17, a Bank of America Merrill Lynch Global Research report says. 

The report said that the growth will be according to the new GDP calculation and on the back of better rains in the period. 

However to push consumption and growth, the bank has also called for a 25bps rate cut in the April 5 monetary policy meet, saying that "we continue to highlight that lower lending rates hold the key to recovery rather than 'reforms' or project clearances."

"After all, economies get out of recession only when lower lending rates revive demand," the report continued. This, in turn, exhausts capacity and leads to higher investment."

In April-September period, however, the bank expects a total 50bps rate cut, assuming that the RBI OMOs about $5 billion by March.

Justifying its reason for vouching for a rate cut from the February 2 RBI policy meet, the Bank said that "real lending rates are running at a 20-year high on tight liquidity."

The report advises investors to track lending rate cuts going ahead for recovery path.