Govt single biggest drag on Indias outlook,says Moodys

Moodys Analytics today said India is growing but below its potential as politics is weighing on the economy and termed the national government as the single biggest drag on business activity.

Indias outlook is still underachieving and poor management has dragged economic growth to below potential,Moodys Analytics senior economist Glenn Levine said. The single biggest factor weighing on the outlook is the Indian government. In all economies it is impossible to separate the economic from the political outlook,and that is particularly the case in India, Levine said. The report further noted that there is broad-based weakness in the economy as all sectors are vulnerable.

Softer global conditions,weak investor and business confidence,government paralysis,and tight monetary conditions are all weighing on demand, the report said.

Risks are still tilted to the downside because of the dire political situation,though there are some reasons for optimism. We see growth accelerating through 2012,but it wont hit potential until the second half of 2013, Moodys Analytics said.