Modi win unlikely to boost growth, says Moody's Analytics

Tags: Modi, Moody's, News
Though downside risks to the economy have receded in recent months, it is likely that the growth engine will continue to sputter until 2015 even if "business-friendly" Narendra Modi becomes prime minister, says a report by rating agency Moody's analytical arm.

"The May elections offer the chance for better governance, especially if the business-friendly Narendra Modi becomes prime minister, but it will be a long road for the economy...As there is little on the horizon to lift the economy in 2014," Moody's Analytics said in a report titled, 'India Underwhelms.'

It senior economist Glenn Levine cited weakness in the real economy as the reason for his pessimism, with third-quarter GDP figures likely to show the economy growing at about 4.8 per cent.

The economy is unlikely to accelerate much in 2014 though the downside risks have receded in recent months with falling inflation and a narrower current account deficit (CAD), he said, adding there is no sign of a lift in the real economy.

From a high of 4.8 per cent of GDP last year, CAD is projected to improve to 2.4 per cent of GDP in 2013-14.

Levine, however, said the economy is better placed to weather the US Fed tapering and other downside risks in 2014.

He said the economy is likely to have expanded 4.8 per cent in October-December, which is the same pace as the first two quarters and below the potential growth rate of 6.5-7 per cent, indicating underlying weakness in the real economy.

The government has pegged growth in this financial year at 4.9 per cent, predicating 5.2 per cent growth in the third and fourth quarters. The government will release Q3 growth numbers on Friday.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • India’s festivals teach us to share our wealth and joy

    India is an aporia in its own true sense.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Tushar Gandhi

Sustainable model for rural sanitation

Prime minister Narendra Modi has promised to build a toilet ...

Zehra Naqvi

How smells evoke strong memories

Remember that time when a passing fragrance transported you to ...

Dharmendra Khandal

Indian zoos need a fresh approach

Recently, when a man jumped in a tiger trench of ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture