Eco prospects brighten, see GDP at 5.2% in 2014: Moody's

Rating agency Moody's today said the downside risks to the economy have receded and prospects have brightened with growth rate expected to accelerate to 5.2 percent in 2014 and 6.5 per cent by end of 2015. "With risks receding and most sectors expanding, our 2014 forecast calls for 5.2 per cent GDP growth ... Will accelerate towards 6.5 per cent by the end of 2015," Moody's Analytics said in a report titled India outlook: prospects brighten.

It said downside risks have receded around the external sector and fiscal deficit, but inflation remains elevated. India's economic growth accelerated to 5.7 percent in April-June quarter, much better than 4.7 percent in the same quarter of previous fiscal. Government expects growth in current fiscal to be between 5.4-5.9 percent. The economy grew by sub-5 percent in 2012-13 and 2013-14.

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Observing that Prime Minister Narendra Modi's first 100 days in office have been relatively uneventful, Moody's said he has an opportunity to lift the economy's long-term trajectory. "Prime Minister Narendra Modi has had a fairly quiet first 100 days in office, with no major policy developments and an interim budget that fell well short of expectations," Moody's said.

India's economy is a huge, slow-moving entity. Policy makers should have their eyes on the longer term, rather than seeking easy, short-term gains, it said, adding so far, the signs are promising that Modi will resist the mistakes of his predecessor.