PM hopeful of bettering last year's growth

Moodys analysis of Indias economy a cause for concern

Prime Minister Manmohan Singh on Saturday said India’s economy is expected to grow at over 6.5 per cent this year.

Even as Singh urged people not to draw any “unwarranted conclusions” from a rating agency’s downgrade of the country’s economic outlook, he admitted that Moody’s analysis of the Indian economy was a cause of concern.

Last week, Moody’s scaled down India’s growth forecast to below six per cent.

Moody’s also hit out at poor policy response from the government and the Reserve Bank of India, which it said, was unable to lift the economy from slumber.

“The fundamentals of Indian economy are strong. Investments and savings are among the highest in the world. I am hopeful, we will do better than 6.5 per cent growth performance of last year,” the prime minister told reporters.

Brokerage house CLSA had downgraded India’s economic growth outlook to 5.5 per cent, while Goldman Sachs put it at 5.7 per cent. American banking major Citi went a step further to slash it to 5.4 per cent for the year ending March 2013.

A weak monsoon has aggravated the crisis, with the country’s policy makers predicting a GDP growth of around six per cent this fiscal. A drop in industrial output in three out of the last four months is likely to impact the country’s GDP, which slipped to a nine-year low of 5.3 per cent in the January-March quarter. Analysts said the prime minister’s optimism has sparked hopes that some pending reforms will be implemented sooner than expected to augment the economy.

Immediate response

Meanwhile, Singh’s remark elicited immediate response from the BJP, which accused him of “living in denial.” Senior BJP leader Arun Jaitley described the prime minister’s remarks on the strong fundamentals of Indian economy as a “surprise”. “The patient does not want to be treated. He is convinced that he is not unwell....,” the Leader of Opposition in Rajya Sabha told reporters, adding that Moody's growth forecast was a “wake up call” for the government.