Moody's project Apr-June quarter GDP growth at 5.1%

Anticipates a steady return to potential growth by 2016

Rating agency Moody's expects the GDP to grow at 5.1% in the first quarter (April-June) of current fiscal, better than 4.7% clocked a year ago.

"The Indian economy likely accelerated in the second quarter of 2014. We expect GDP growth of 5.1%. Most parts of the economy are improving. Capital expenditure could surprise on the upside," Moody's Analytics said in a report.

The Indian economy grew by 4.7% in the April-June quarter last year and the growth rate was also 4.7% for full 2013-14. After a gap of several years, the Indian economy grew by sub-5% in 2012-13 and 2013-14.

The official data for June quarter of 2014 will be released on Friday.

"We anticipate a steady return to potential growth by 2016. India's new Prime Minister Narendra Modi has taken office at an opportune time," Moody's Analytics said, adding that the economy is in the early stages of a cyclical upturn.

It said growth could lift towards 7% with some modest economic reforms.

Moody's Analytics projected that even without the government help, the economy would grow by around 5% in 2014 and close to 6% in 2015.

"An improving economy, coupled with Modi's strong electoral mandate, provides an ideal platform from which to implement his agenda," it added.

Industrial production is growing at a solid pace and should be mirrored in the cyclical upturn in GDP, it said.

Outlining the signs of economic upturn, Moody's Analytics said exports and imports have also rebounded and business investment could surprise on the upside.

"Confidence lifted with the May election result, and production of capital goods has surged in recent months. We expect GDP growth hit 5.1% in the three months to June," it said.