While India’s charismatic central bank governor Raguhram Rajan may have turned around investor sentiment towards the country in recent months, Asia’s third largest economy appears to be stuck in a rut when it comes to growth.
India’s gross domestic product (GDP) data due out on Friday is expected to show the economy grew 4.9 percent during the October-December quarter, according to a poll by Reuters, largely in line with the 4.8 percent growth in the previous three months and well under its potential growth rate of 6.5-7 percent.
“Downside risks to the Indian economy have receded in recent months as inflation has trended lower and the external shortfall has narrowed. The economy is now much better placed to weather the U.S. Fed [Federal Reserve] tapering and other downside risks in 2014. But there is no sign of a lift in the real economy,” said Glenn Levine, senior economist at Moody’s Analytics.
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