Business
Financial Services: Moody’s affirms India’s sovereign rating; says GDP growth to support increase in income level
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NEW DELHI: Rating agency Moody‘s Investors Service on Friday affirmed India’s sovereign ratings at ‘Baa3’ with stable outlook and said that high GDP growth will contribute to gradually rising income levels.
“The affirmation and stable outlook are driven by Moody’s view that India’s economy is likely to continue to grow rapidly by international standards, although potential growth has come down in the past 7-10 years. High GDP growth will contribute to gradually rising income levels and overall economic resilience,” Moody’s said in a statement.
“In turn, this will support gradual fiscal consolidation and government debt stabilization, albeit at high levels. In addition, the financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure,” it said.
Moody’s said the country’s financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure.
“A lasting upward shift in global and domestic interest rates highlights the risks stemming from a high debt burden and weak debt affordability, which have been long-standing features of India’s sovereign rating and Moody’s expects them to remain,” it said.
It further noted that the government’s ongoing emphasis on infrastructure development, mirrored in the increasing share of capital expenditure in the Union budget, has led to tangible improvements in logistics performance and the quality of trade and transport-related infrastructure.
On maintaining a stable outlook, it said it incorporates the likelihood that India’s fiscal metrics will continue to gradually improve amid robust growth prospects compared with peers.
“The affirmation and stable outlook are driven by Moody’s view that India’s economy is likely to continue to grow rapidly by international standards, although potential growth has come down in the past 7-10 years. High GDP growth will contribute to gradually rising income levels and overall economic resilience,” Moody’s said in a statement.
“In turn, this will support gradual fiscal consolidation and government debt stabilization, albeit at high levels. In addition, the financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure,” it said.
Moody’s said the country’s financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure.
“A lasting upward shift in global and domestic interest rates highlights the risks stemming from a high debt burden and weak debt affordability, which have been long-standing features of India’s sovereign rating and Moody’s expects them to remain,” it said.
It further noted that the government’s ongoing emphasis on infrastructure development, mirrored in the increasing share of capital expenditure in the Union budget, has led to tangible improvements in logistics performance and the quality of trade and transport-related infrastructure.
On maintaining a stable outlook, it said it incorporates the likelihood that India’s fiscal metrics will continue to gradually improve amid robust growth prospects compared with peers.
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