India’s 2011-12 GDP growth may fall below 7 per cent: Moody's

21 Dec 2011

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Global rating agency Moody's has projected a further moderation in the country's economic growth during the current financial year (2011-12) to below 7 per cent – below the latest official estimate of 7.5 per cent.

The rating agency attribute this to both domestic and global factors, including high inflationary tendencies, low capital formation, moderation in industrial growth and global economic uncertainty among other things.

''In the last few months, tight monetary conditions and a cloudy global outlook have combined to reduce manufacturing output and investment initiatives, Moody's said.

''We expect growth to fall below 7 per cent in 2011-12 from 8.5 per cent in 2010-11, due to the impact of an uncertain global funding environment, high domestic interest rates and the apparent lack of policy initiatives that can revive business confidence,'' Moody's said in a report.

While a growth rate between 6 per cent and 7 per cent this year would be lower than the 8.5 per cent average over the last five years, it would still be higher than the median for 'Baa3' rated countries, it said.

Moody's said the cyclical dip could reverse some time in 2012-13 as inflation cools and the current tight money policy is reversed.

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