India’s economic growth rate in the January-March quarter is likely to slip to 7.2 per cent from 7.5 per cent in the previous three months, mainly on account of lower production and weak global demand, credit rating agency Moody’s Analytics said today.
It also raised questions on the new GDP data series by the Central Statistical Organisation (CSO), which takes 2011-12 as the base year, saying that new data “are dubious” as they do not align well with other indicators of economy.
According to CSO’s new GDP data, the Indian economy expanded by 6.9 per cent in 2013-14 and the growth is estimated at 7.4 per cent for 2014-15.
CSO will release its March quarter GDP data tomorrow.
For the quarter ended March, Moody’s said economic growth “will likely show a slowdown to 7.2 per cent, year-on-year, from 7.5 per cent in the December quarter“.
It said, “External headwinds weighed on India’s March quarter GDP. The trade deficit widened, exports fell at double-digits in the opening months of 2015. Mixed global demand is partly to be blamed, while lower global commodity prices are also hurting exporter incomes.”
It added however that India’s potential growth rate is “likely closer” to 9 per cent.
As regards domestic factors, Moody’s said commercial banks have been reluctant to pass on the interest rate cuts effected by the Reserve Bank.
“High borrowing costs are hurting the business sector as manufacturing production grinds lower,” it added.