New Delhi, Aug 28 – With the Reserve Bank of India (RBI) due to release the GDP (gross domestic product) figures Friday, growth in the current fiscal is expected top 5.5 percent as predicted by the country’s central bank.
The RBI, in its annual report for 2013-14, had projected the GDP growth for 2014-15 at 5.5 percent, emerging out of the sub-5 percent growth in the preceding two years.
Listing India as Baa3 stable, ratings agency Moody’s said the economy is poised for acceleration in GDP growth, based on expected policy reforms and robust investor sentiment.
Confidence lifted with the May election result, and production of capital goods has surged in recent months, said Glenn Levine, senior economist at Moody’s Analytics.
However, inflation remains high from a global standpoint weighing down an otherwise promising economic recovery, Moody’s said.
Indian authorities recognize that the current recovery will be difficult to sustain if inflation persists. They have announced several measures to curtail food price pressures, Moody’s said.
While these policies may alleviate the food-price spikes stemming from lower food output due to this year’s relatively weak monsoon, they do not address the long term widening of the gap between food demand and supply, it added.
The pickup is broad based with consumer discretionary, exports, transportation, infrastructure and capital goods sectors surprising positively. We expect this momentum to be sustained as sentiment has improved and the government is resolving project constraints, said a Nomura report.
The RBI, in its macro-economic outlook had said growth in the second half of 2013-14 may turn out to be marginally higher than in the first half, mainly due to a rebound in farm output and better exports.
However, industrial growth continues to stagnate and leading indicators of the services sector exhibit a mixed picture. Clear signs of a pick-up are yet to emerge, though a modest recovery is likely to shape up in 2014-15, it said.