India's economic recovery likely to remain slow in the second half of 2014: Moody's

Amid rising concerns over the deteriorating macro-economic indicators of the country, global rating agency, Moody's has stated that India's economic recovery is likely to be slow in the second half of 2014 and the outcome of general elections could affect the growth prospect. Moody’s has assigned 'Baa3' rating on India with a stable outlook indicating medium grade with moderate credit risk.

Further, the rating agency has projected that India's inflation and interest rates to decline during the year. Referring to country’s fiscal position, Moody’s highlighted that fiscal deficit would remain higher in future with social welfare measures such as the Food Security Act passed last year that will raise the government's medium-term expenditure commitment. Meanwhile, the rating agency added that the structure of India's government debt compromises domestic currency, relatively low real rates and have long tenors, which has mitigated stress on the government's fiscal position.  On the other hand, the government hopes to contain fiscal deficit at 4.8 percent of GDP in FY14 and reduce it further to 3 per cent by FY17.

Global rating agency also highlighted that its expectation for global growth prospects will improve with declining global risks and sovereign ratings in South and Southeast Asia will remain largely stable in 2014.