India's Economy Looks Good And Is Poised For Growth Going Forward, Says Moody's

India's economy saw a good growth even though they were tad lower than it was expected to be, Moody's Analytics APAC chief economist Steven Cochrane told NDTV Profit in an interview.

Manufacturing growth looks good, as does service growth. "Not withstanding weaker numbers in the top line that could be because of strong numbers from a year ago, the economy is in a sweet spot," he said.

Inflation is lower, and the trajectory of the south-west monsoons looks good, indicating that the real economy should do well in terms of production and consumption, he added. Exports are not great but growing in a slow-growing global economy, he explained.

"All in all, the economy is looking good and poised for growth going forward," Cochrane said in an interview post the release of the GDP figures on Friday.

The gross domestic product grew 6.7% in the April-June quarter, lower than 7.8% in the January-March 2024 quarter. Gross value added, which strips out indirect tax and subsidies, is estimated to have grown 6.8% as compared with 6.3% in the preceding quarter.

"We should look for an interest rate cut going forward, given that the global central banks, along with the Fed, will cut rates," he said.

While monetary policy easing will not provide a huge boost, given that inflation is easing and we could be looking at one or two rate cuts, that should aid consumption going forward, he explained. Also, it takes time for monetary policy to have an impact, but it will boost investor sentiment and spending, he added.

"So, interest rate cuts can only be good, but the impact will be slow. We also expect that the government budget will be stimulative," he said.

Moody's Ratings raised India's GDP growth projections for 2024 and 2025 on Thursday. It now expects GDP to grow by 7.2% in 2024, up from 6.8% previously and 6.6% growth in 2025, against the earlier estimate of 6.4%.

These forecast changes assume strong broad-based growth, the ratings agency said. "We recognise potentially higher forecasts if the cyclical momentum, especially for private consumption, gains more traction," the global ratings agency had said. From a macroeconomic perspective, the Indian economy is in a sweet spot, with the mix of solid growth and moderating inflation," according to the note.