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Home Credit Bureau India Moody's: Despite slow GDP growth, India’s outlook stable

Moody's: Despite slow GDP growth, India’s outlook stable

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NEW DELHI, JUNE 25: Last couple of months have been rough for Indian government as rating agencies such as S&P and Fitch have changed the rating outlook on India to ‘negative’ from ‘stable’.
 
However, another global credit rating agency Moody has maintained its stable outlook on India’s rating.
 
Moody’s reasoned that various credit challenges – such as weak fiscal performance, tendency towards inflation and an uncertain investment policy environment – have characterised the Indian economy for decades, and are already incorporated into the current ‘Baa3’ rating.
 
"Furthermore, the impact of lower growth and still-high inflation will deteriorate credit metrics in the near term, but not to the extent that they will become incompatible with India's current rating," Moody's said in a report. 
 
The rating agency, however, expects that global and domestic factors, including potential shocks in agriculture, could keep India’s growth below trend for the next few quarters.
 
The decision will surely gave much-needed respite to the Indian government as it faces heat due to a cut in outlook to 'negative' from 'stable' by Standard & Poor's in April and by Fitch last week, reflecting fading investor confidence triggered by worsening conditions in the economy.
 
Finance minister Pranab Mukhejee criticised Fitch for relying on older data and ignoring recent positive trends in the economy. "It has not taken note of many recent initiatives taken by the government, such as UIDAI, fertiliser subsidy reform, capping subsidies as a fraction of GDP and new manufacturing policy," he said reacting to the outlook downgrade. 

 

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