Moody’s affirms India’s sovereign rating, maintains stable outlook

New Delhi, August 18

Global ratings agency Moody’s Investors Service on Friday affirmed the ‘Baa3’ rating on India and maintained a stable outlook as India’s economy is likely to continue to grow rapidly by international standards, although the potential for growth has come down in the past seven to 10 years.

GDP growth to support fiscal consolidation

High GDP growth will contribute to gradually rising income levels and overall economic resilience. This, in turn, will support gradual fiscal consolidation and government debt stabilisation, albeit at high levels. Moody’s investors service

“High GDP growth will contribute to gradually rising income levels and overall economic resilience. This, in turn, will support gradual fiscal consolidation and government debt stabilisation, 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 expects India’s economic growth to outpace all other G20 economies through at least the next two years, driven by domestic demand. It said India’s financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure.

“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,” it noted, adding that the economic benefits of the digital public infrastructure (DPI) will materialise over time and support India’s growth potential.

Moody’s said it maintained a stable outlook for India because it is likely that India’s fiscal metrics will continue to gradually improve amid robust growth prospects compared with peers.