India8217;s economic growth expected at 5.5-6.5 in 2013: Moody8217;s

Based on its central forecast scenarios,Moody8217;s Investors Service has estimated that Indian economy would see 5.5-6.5 per cent growth in 2013,as against 3.9 per cent last year. The growth is projected to improve further to 6-7 per cent in 2014,it noted.

According to Moody8217;s,one percentage point range in the forecast is to 8220;avoid spurious precision8221; and to focus on significant changes that could potentially influence rating decisions.

8220;Despite the recent decline in wholesale price inflation,CPI inflation remains in double digits,which points to pricing pressures elsewhere in the economy.

8220;As such,while GDP growth is likely to pick up during 2013,it will probably take at least another year or two before the economy matches the pace of expansion seen during 2010 and 2011,8221; Moody8217;s said in a report.

The agency noted that the Current Account Deficit CAD remains a persistent concern for India,8221;as it leaves the country vulnerable to capital exodus if investors8217; risk appetite starts to wane8221;.

Concerned over widening CAD mainly due to high gold imports,both the government and the Reserve Bank are taking steps to check imports. CAD touched an all-time high of 6.7 per cent in October-December 2012 quarter.

Noting that the growth has recently fallen short of expectations in India,Moody8217;s said that policymakers8217; efforts to incentivise new investment and saving have been relatively small in scope,and are unlikely to presage a pronounced increase in capital spending in the near term.

It said India as also Brazil is 8220;struggling to boost investment and wider economic growth in the face of private- sector caution and relatively high inflation8221;.

The possibility of slower-than-expected growth in key emerging markets 8212; China,India and Brazil 8212; is a serious threat to the global recovery,Moody8217;s said.

Finance Ministry officials recently told Moody8217;s representatives that India8217;s growth story is credible and the government is taking steps to deal with the fiscal issues.