Moody’s Analytics—a division of Moody’s Corporation—expects India’s GDP growth to approach a 6 percent pace by the year’s end and accelerate towards 6.5 percent by end of 2015.
This growth forecast assumes significance as Indian economy has improved in recent months, though for cyclical reasons unrelated to the new Government.
It comes on the heels of the April-June 2014 quarter GDP growth touching a level of 5.7 percent, which is a two-year high.
In its report titled “India Outlook: Prospects Brighten”, Moody’s Analytics said that the Prime Minister Narendra Modi’s first 100 days in office have been “relatively uneventful”.
Modi has an opportunity to lift the economy’s long term trajectory, the report said, adding that substantial economic reforms and boost to productivity growth could help the economy achieve 7-8 percent annual GDP growth sustainably.
“India’s economy is huge, slow-moving entity, to say nothing of the fractious political system. It was always going to take a while for the Modi Government to find its feet.
Policymakers should have their eyes on the longer term, rather than seeking easy, short-term gains. So far, the signs are promising that Modi will resist the mistakes of his predecessor”, the report said.
RATE CUT UNLIKELY THIS YEAR
Moody’s Analytics—which is engaged in economic research and analysis—also said in this report that it is increasingly likely that the RBI will not cut interest rates this year.
“We expect inflation to ease from current levels, but not enough to justify lower interest rates. We foresee an initial rate cut in the second quarter of 2015, although this depends on the strength of the recovery, the monsoon rainfall and the subsequent path of inflation”.