Moody's pegs growth at 5% this year

Says higher growth projection comes against the backdrop of a new govt coming to power with single majority

Projecting a better growth outlook for India, global rating agency Moody’s on Tuesday said the country’s gross domestic product will grow by five per cent this year and accelerate further in 2015.

The higher growth projection for India comes against the backdrop of a new government coming to power with single majority for the first time in three decades.

However, the rating agency said the growth estimates are still way lower than the levels seen before global crisis. “For India in particular, the projected growth rates are still significantly below pre-crisis and well short of the new government’s target to raise growth to seven to eight per cent by 2017-18,” the report said.

Moody’s also said India and Indonesia would see “more resilient GDP growth”.

Global slowdown along with sluggish domestic economic activities, high interest rates and stubborn inflation pulled down India’s growth to sub-five per cent in the past two years.

The economy is likely to expand in the range of 5.4 to 5.9 per cent in this financial year, according to government estimates.

After recovering in 2009-10 and 2010-11, GDP growth slowed down to a decade’s low of 4.5 per cent in 2012-13. It picked up marginally to 4.7 per cent in 2013-14.

The agency’s projection comes a day after Paris-based think tank Organisation for Economic Cooperation and Development said the Indian economy is seeing growth momentum.