Indian PM predicts 6.5% growth

Premier Manmohan Singh forecast on Saturday stronger growth for India's stumbling economy, prompting opposition charges that the 79-year-old leader was in "denial" mode.

Singh said he expected Asia's third-largest economy to expand this year by more than last year's 6.5 percent -- a far rosier projection than many private economists who say India could post its worst economic performance in a decade.

"The fundamentals of the Indian economy are strong. Investments and savings are among the highest in the world. I am hopeful we will do still better than 6.5 percent growth performance of last year," Singh told reporters in New Delhi.

Singh's comments came after global ratings agency Moody's research arm on Thursday scaled down its growth forecast for this fiscal year ending March 2013 to 5.5 percent.

The forecast "is a cause of concern but one should not draw unwarranted conclusions", said Singh, who is credited with beginning the process of liberalising India's shackled economy in the early 1990s when he was the finance minister.

"We see nothing on the horizon to lift the economy from its funk," Moody's Analytics economist Glenn Levine said on Thursday.

The main opposition Bharatiya Janata Party (BJP) said Singh's upbeat outlook showed he was in denial mode over the country's economic situation.

Singh's assertion that the economy is strong "clearly shows that the prime minister is living in denial about the real state of the Indian economy," said BJP upper parliamentary house leader Arun Jaitley.

"The patient does not want to be treated. He is convinced he is not unwell," Jaitley said, urging Singh to treat recent economic indicators as a "wake-up" call and take effective measures.

On Thursday, data showed industrial output shrank by a surprise 1.8 percent in June, undermined by high interest rates to fight inflation and Europe's debt crisis which has hit exports.

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