Slightly higher growth in Sept quarter: Moody's

Moody’s Analytics today pegged India’s economic growth for the second quarter of the current financial year at a little higher than the 5.5 per cent recorded in the first quarter. The economic research and analysis wing of Moody’s Corporation said growth in the Indian economy was near the bottom of the current cycle and the recent reforms would help reduce key risks but would not lift the near-term outlook.

In a report, titled “India Outlook: Risks Receding”, it expected the economy to hit its “potential” growth rate by the second quarter of 2013-14.

“India is due to report its third quarter GDP numbers next week and they are likely to show the economy expanded by a little more than 5.5 per cent year-on-year, roughly the same as in the first two quarters but substantially below where GDP was 12 months ago,” said Glenn Levine, associate director, Moody’s.

 

It should be noted here that Moody’s is analysing growth on a calendar year basis. Accordingly, when it says third quarter, this refers to the second quarter of financial year 2012-13, as usually understood. GDP data for the second quarter of this year are slated to be released on November 30.

The agency said growth had stabilised but at a rate well below the long-run potential. “This underscores the economy’s challenges and it will be awhile before GDP growth is back at its trend rate. Our outlook is for a steady upturn in growth across the coming quarters, before growth finally hits potential by the second half of 2014.”

On a day when Parliament was stalled due to the political storm over opening the multi-brand retail sector up to 51 per cent foreign direct investment, Moody’s said such moves help to shore up India’s long-term prospects.

The economy grew 5.5 per cent in the first quarter, slightly up from 5.3 per cent from the fourth quarter of 2011-12 but way down from the eight per cent in April-June of 2011-12.

In the second quarter of 2011-12, growth was 6.7 per cent. So, the slightly upward movement in the second quarter growth that Moody’s mentions might come from the lower base, analysts said.

The government expected the economy to grow at a higher rate in the second half of this financial year.