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HindustanTimes Thu,17 Apr 2014

India to grow at 7% in 2014, says Moody's

HT Correspondent, Hindustan Times  New Delhi, March 07, 2013
First Published: 22:51 IST(7/3/2013) | Last Updated: 02:16 IST(8/3/2013)

Global credit rating agency Moody's has forecast a 7% growth for the Indian economy in 2014, signalling a turnaround in the perception of the economy, which until recently, was the target of criticism by global research agencies for its precarious state of public finances.

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It, however, warned that achieving double-digit growth rate was "wildly optimistic" unless significant structural reforms measures were taken.

"Some government policymakers, most notably RBI governor D Subbarao, have begun pushing for a return to double-digit growth. This is wildly optimistic and, without significant structural reform, a dangerous view to take," said Moody's Analytics, an arm of Moody's.

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India's economic growth is set to slump to a 10-year low of 5% in 2012-13, fuelling fears of a widespread slowdown as factories and farms produce less, exports shrink, companies offer fewer jobs and prices continue to remain high.

The advance estimates of India's gross domestic product (GDP) - or the value of all goods and services in the country - put out by the Central Statistics Office (CSO) on Thursday comes at a time when the government is caught in a tug-of-war between rising prices and sliding growth, and is struggling to halt the slide in the economy.

The alarmingly slow growth, worst since the drought-year of 2002-03, will also imply that India will no longer remain the world's second-fastest growing major economy behind China.

China's economy grew 7.9% in 2012 while estimates put Indonesia's growth at over 6% last year.

The government has projected a growth rate of 6.1-6.7% for 2013-14 in the budget.

"These projections assume that monsoon is normal, the rate of inflation declines further and that the anticipated mild recovery of global growth rate takes place," said the medium-term fiscal policy statement placed along with the budget.

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