Wednesday, May 22, 2024
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Moody’s maintains stable outlook for India

Rating agency Moody’s maintained outlook for the government of India to be stable. The long-term and short-term ratings of the government of India is pegged at Baa3 and P-3, respectively.

A Moody’s sign is displayed on 7 World Trade Center, the company’s corporate headquarters in New York.(Reuters)

The stable outlook incorporates the likelihood that India’s fiscal metrics will continue to gradually improve amid robust growth prospects compared with peers.

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Maintaining stable outlook, Moody’s noted India balances its large and diversified economy with high growth potential, a relatively sound external position, and a stable domestic financing base for government debt against high general government debt, weak debt affordability and low per capita income.

A stronger and more stable economy has emerged from the pandemic, said Moody’s although it does not expect a material reduction in debt amid gradual fiscal consolidation over the next year.

It also asserted that India benefited from infrastructure development, digitalization and the rehabilitation of the financial system.

Following a series of relatively strong growth numbers in the first three quarters of financial year 2023-24, Moody’s has revised India’s real GDP growth projection to 8 per cent for the full year.

Moody’s projects economic growth to be sustained at well above 6 per cent over the next two fiscal years, although there are upside risks to the projections.

Moody’s Ratings has completed a periodic review of the ratings of India and other ratings that are associated. The review was conducted through a rating committee held on April 4, 2024.

In a report released by Moody’s in March, the global rating agency said it expected India’s economic growth in 2024-25 growth above that of other emerging market G20 peers, given its domestic demand managed to sustain momentum.

India’s GDP grew at a massive 8.4 per cent during the October-December quarter of the current financial year 2023-24 and the country continued to remain the fastest-growing major economy. The Indian economy grew 7.8 per cent and 7.6 per cent during the preceding two quarters – April-June and July-September.

India’s economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22, respectively.

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