Global ratings agency Moody's on Thursday said the December quarter was likely the bottom of the economic cycle and the Indian economy is headed for better times. India is likely to growth at 6.2 per cent in 2013 against 5.1 per cent projected growth in 2012, the ratings agency added.
"The biggest change... is that the government is now on a steady path of fiscal and regulatory reform and better governance. The so-called big bang of economic reforms announced since August has helped to lift corporate confidence and should translate into better spending and capital expenditures from mid-2013," Moody's said.
India's twin deficit problems - fiscal and current account deficits - have started to ease, Moody's noted.
"Fixed investment rebounded 6.1 per cent year-on-year in the fourth quarter and is expected to grow at around this pace across 2013, lifted by rising confidence and lower interest rates," the ratings agency said.
Moody's expects India's headline inflation to drop to 6 per cent by the end of 2013, paving the way for an expected rate cut around mid-2013.
Budget not prudent, but enough to help growth:
Moody's says Finance Minister P Chidambaram's Budget "delivered the easiest and smallest cuts in the deficit, enough to free up funds to help the government's 2014 electoral chances without fanning fiscal risk."
The Budget does nothing to fortify India's long-term growth, but it does suggest that government consumption, which slowed sharply in the fourth quarter, will accelerate in 2013, lifting GDP growth, Moody's added.
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