in

Global economic turmoil not to impact India’s recovery, says Moody’s




India’s economic recovery is unlikely to be derailed by rising challenges to the global economy, higher inflation and tightening financial conditions, Moody’s Investors Service on Tuesday said, affirming a stable outlook for the country’s rating.


Moody’s saw the Indian economy expanding by 7.6 per cent in the current fiscal compared to 8.7 per cent growth in the last financial year that ended on March 31. For 2023-24, it estimates a 6.3 per cent GDP growth.


It rates India at Baa3, the lowest investment grade rating. In October last year, it revised upwards the rating outlook to stable from negative.


“The credit profile of India reflects key strengths, including its large and diversified economy with high growth potential, a relatively strong external position, and a stable domestic financing base for government debt,” Moody’s said in a note.


Principal credit challenges include low per capita income, high general government debt, low debt affordability and limited government effectiveness.


“We do not expect rising challenges to the global economy, including the impact of the Russia-Ukraine military conflict, higher inflation, and the tightening financial conditions on the back of policy tightening, to derail India’s ongoing recovery from the pandemic in 2022 (FY2022-23) and 2023 (FY2023-24),” it said.


The stable outlook, it said, reflects its view that the risks from negative feedback between the economy and financial system are receding.


“With higher capital buffers and greater liquidity, banks and non-bank financial institutions (NBFIs) pose much less risk to the sovereign than we previously anticipated, facilitating the ongoing recovery from the pandemic.


“While risks stemming from a high debt burden and weak debt affordability remain, we expect that the economic environment will allow for a gradual narrowing in the general government fiscal deficit over the next few years, avoiding further deterioration in the sovereign credit profile,” it said.


Moody’s said it could upgrade the rating if India’s economic growth potential increased materially beyond expectations, supported by effective implementation of economic and financial sector reforms that led to a significant and sustained pickup in private sector investment.


Effective implementation of fiscal policy measures that resulted in a sustained decline in the government’s debt burden and improvements in debt affordability would also support the credit profile.


However, the rating can be downgraded if weaker economic conditions and/or a resurgence of financial sector risks.


“Slower growth than we project would contribute to a continued rise in the debt burden, which could weaken the sovereign’s fiscal strength further and lead to a negative rating action,” the rating agency said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor



supply hyperlink

What do you think?

Written by admin

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

Asia Cup: Why Did Ravichandran Ashwin Replace Ravi Bishnoi In Crucial Clash vs Sri Lanka? Here’s What Rohit Sharma Had To Say

India vs Sri Lanka: Asia Cup, 2022 Live Cricket Score, Live Score Of Today's Match on NDTV Sports