Moody’s revises India growth forecast to 6.4 percent


New Delhi : Global consultancy Moody’s, which last week contended that the drought would bring India’s growth down to 6.2 percent, Thursday revised its prediction to say the “stronger-than-expected start” this fiscal spelt a 6.4 percent growth in 2009-10, and 9 percent by 2012-13.

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“India’s June quarter economic performance surprised slightly on the upside. On a year-ago basis, GDP growth accelerated to 6.1 percent compared to (our) forecast of 5.9 percent,” said Sherman Chan, economist with Moody’s, the research arm of Moody’s.

“The stronger-than-expected start of the fiscal year has prompted Moody’s to revise India’s annual growth forecast from 6.2 percent to 6.4 percent,” Chan added.

“Like China, India has ample long-term growth potential, especially with its large population and vast underdeveloped areas. The need to improve infrastructure will keep overall economic activity buoyant in coming years.”

Last week, Moody’s had said GDP growth in 2009 would be “mildly slower than in 2008”, and predicting it would slow to 6.2 percent.

Despite the upward revision of its GDP growth forecast, Moody’s warned that the farm output was likely to decline till December, impacting overall GDP growth. “The robust momentum in manufacturing during recent months may be unsustainable in the near term,” Chan said.

“Policymakers certainly cannot rule out chances of a dip in the September quarter before activity continues with its mild upward trend,” Chan said.

“Public expenditure is expected to slow significantly, offset by private investment, as the government attempts to restore fiscal discipline.”

Nevertheless, she added, India’s medium-term prospects were “rosy”, and that GDP growth would accelerate to 7.2 percent next fiscal and further accelerate to touch 9 percent in 2012-2013.