Forthcoming lok Sabha elections would delay the reforms process and hurt growth in India, international rating agency Moody's has claimed, while predicting that it expects economic growth to go up to only 5.5 per cent in FY15.
"We expect GDP growth to remain weak at 5.5 per cent in FY15 as the elections will delay reforms needed to revive growth," it said in a note. Growth has been below the trend for much of FY14 and the government's official estimate pegs it at 4.9 per cent, a bit higher than 4.5 per cent achieved in FY13. lok Sabha elections are scheduled for April-May. It said interest rates will continue to remain high and hence the rupee will continue to be volatile, making it difficult for importers and exporters.
The agency also gave a negative outlook for non-financial corporates in 2014 on weak economy, political uncertainty and effects of the US Fed's tapering. "lower economic growth, volatile exchange rates, rising borrowing costs and slow economic reforms have dampened prospects across many sectors," it said in the report prepared with its local counterpart Icra.
It specifically said domestically focused sectors like real estate, cement, automotive, steel, metals and mining, and retail which are dependent on "vagaries of regulation and policy-setting" have negative outlooks. Others like exploration and production, IT/business process outsourcing and pharma which are linked to developments in the external sector are comparatively better placed, it said.