Mumbai: Rating agency Moody’s analytics arm on Wednesday said that even if the businessfriendly Narendra Modi becomes Prime Minister after the Lok Sabha elections, the economy would still take a longer time to revive as there is little on the horizon to lift the economy in 2014. “Business confidence is low and the government budget is just about all gone. The elections offer the chance for better governance, especially if the business-friendly Narendra Modi becomes PM, but it will be a long road back for the Indian economy,” said Glenn Levine, senior economist at Moody’s Analytics.
However, the rating agency pointed out that the economy is now much better placed to weather US Fed tapering and other downside risks in 2014 though there is no sign of a lift in the real economy. “Downside risks to the Indian economy have rec-eded in recent months as inflation has trended low-er and the external shortfall has narrowed,” said Mr Levine. According to the rating agency, the fourth quarter GDP figures, which is scheduled to released this week is expected to expand at around 4.8 per cent year on year (YoY), roughly the same pace as the first three quarters of 2013, but well below the economy’s potential growth rate of 6.5 per cent to seven per cent.
“Most sectors of the economy remain weak. Mining and manufacturing have been soft throu-ghout 2013; consumer de-mand is soft, and even the domestically-focused service industry slowed. Bus-iness investment has been particularly weak in 2013 as confidence remains low, and borrowing costs have lately been lifted,” he added. Though the export sector improved, the agency believes that this alone will not be sufficient enough to drag the Indian economy forward.
