Indian economy is expected to pick up pace in 2015 and grow in the range of 5 to 6 per cent, helped by strong domestic demand, rating agency Moody's said. "India will have stronger GDP growth in 2015, which we forecast at 5-6 per cent, up from around 5 per cent in 2014," Moody's said in a report titled - 2015 Outlook-Global Credit Conditions.
The country, it said, has benefited from a strong domestic demand base and diversified export markets that give protection from the effects of a slowing Chinese economy and muted growth in the euro zone and Japan.
"Employment and consumption are likely to rise in India, and the fall in global commodity prices will help to lower high inflation in the country," Moody's said. As per official estimates, economic growth in the current fiscal ending March 2015 would be between 5.4 and 5.9 per cent. The growth had slumped to sub-5 per cent in the earlier two consecutive fiscals.
It also projected that corporates would see improved cash flows on account of acceleration in manufacturing activity. However, Moody's outlook on the banking system remains negative as it expects poor asset quality to require continued provisioning and strengthened capital buffers.
"Our outlook for the Indian banking system remains negative, reflecting high leverage in the corporate sector that will inhibit any meaningful recovery in asset quality, notwithstanding a moderate rebound in economic growth," it added.
India can achieve 8-9% growth rate: Manmohan Singh
Meanwhile, former prime minister Manmohan Singh said India could achieve a growth rate of 8-9 per cent provided there is a "national consensus" on methods to take advantage of globalised world.
"I think that even though many other emerging economies are not doing too well, India has an opportunity to move towards a growth rate of 6-7 per cent and thereafter to 8 per cent," Singh said while delivering a lecture at Ficci. He said the country is poised to take advantage of globalization and engage in trade to finance its imports through exports.
"Today we cannot grow in isolation... India is well placed to take advantage of this situation provided we evolve a meaningful national consensus to move ahead," he said. Except for India, other emerging economies are not doing well, Singh said, adding the country is poised for a 8-9 per cent growth. There are opportunities, there are risks. India is currently at least poised to create a milieu in which the growth story of India can be another worthwhile chapter in the evolving global economies," he said.
Singh said a meaningful solution to India's problems of poverty, ignorance and diseases can be found only in the framework of rapidly expanding economy. "There is a broad consensus that we need a growth rate of 8-9 per cent to create 10-12 million jobs every year if we have to conquer unemployment within our life-time," he said.
