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Moody’s cuts India GDP target to 7%, says still good enough

Ratings agency Moody’s has downgraded the country’s 2015-16 gross domestic product (GDP) growth target to 7 percent, from 7.5 percent earlier.

Ratings agency Moody’s has downgraded the country’s 2015-16 gross domestic product (GDP) growth target to 7 percent, from 7.5 percent earlier.

In its Global Macro Outlook report, the firm said it had slashed its growth outlook “in light of a drier than average monsoon” though it added that it expects GDP growth to go back to 7.5 percent in the next fiscal.

In an interview with CNBC-TV18, Moody’s Atsi Sheth, however, said that the forecast wasn’t entirely driven by the ongoing weakness in monsoon.

“We’ve looked high frequency data and what we see is that industrial recovery is proceeding but very slowly,” she told Sonia Shenoy and Latha Venkatesh in an interview.

The senior Moody’s executive added that she expects the lower demand to reflect in lower inflation — “it may be below RBI’s 6 percent target next year” — but said that the central bank will look to the monsoon progress before taking a call on interest rates.

“I should emphasise that even at 7 percent, India is among the fastest-growing among emerging market countries,” Sheth said.

More to come.

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