Indian economy to take a year to recover: Moody's

The year 2009 is set to be more difficult for the Indian economy and despite the government's stimulus packages, it would take at least a year before it starts recovering, economists at Moody's has said.

"I don't think the stimulus is sufficient to start a recovery. The most it can do is to minimise the magnitude of a further slowdown... India will most likely start to recover in the March quarter (2010)," Moody's economy.Com economist Sherman Chan told PTI from Sydney.
 
She added this year will be more difficult than last year. "We probably won't see a solid rebound until early 2010. The US needs to recover first. Then global economic activity will begin to pick up," Chan added.
  
The Indian economy grew by 5.3 per cent in the third quarter of this fiscal, its lowest rate in over five years, against a whopping 8.9 per cent a year ago, as agriculture and manufacturing output contracted.

This has ensued debate between the government and the economists. While the government is still confident of achieving close to 7 per cent growth this fiscal, economists at various global financial institutions see a further fall in the figures.

When asked if the 'worst' is over for the Indian economy, she said it is difficult to say as the whole year is expected to be extremely tough.

However, the slight improvement can be seen in the October-December 2009, because the US economy will slightly rebound by then, which should help to give global business confidence some support.
  
In addition to the two stimulus packages, recently, the government announced a Rs 30,000-crore boost to the slowing economy by cutting excise duty and service tax by two per cent each.
  
The government has also extended a four per cent reduction in excise duty, provided in the first stimulus package, beyond this fiscal-end. It also announced cut in excise duty on bulk cement by 2per cent.
  
According to Commerce Minister Kamal Nath the worst is over. "I believe the worst is over," Nath said, adding, the last two months of the current fiscal would be much better in terms of growth.