If growth is possible, India’s rating will rise and debt will fall: Moody’s


If growth is possible, India's rating will rise and debt will fall: Moody's

Moody’s expects India’s real GDP growth to be higher than 2019 this fiscal (April 2021 to March 2022).

New Delhi: Moody’s Investors Service on Wednesday said it would raise India’s rating if there was an increase in growth capacity and a continued decline in government debt.

The US-based rating agency on Tuesday raised India’s sovereign rating outlook from ‘stable’ to ‘negative’ while confirming the ‘Baa3’ rating — a very low investment rating, which is slightly above the junk level.

Also read: Moody’s transforms Indian banks and corporations from negative to stable

Christian de Guzman, senior vice president of Moody’s Investors Service, Sovereign Risk Group, told PTI that the ‘sustainable’ outlook reflects the view that it will take 12-18 months to raise India’s sovereignty standards.

“We have said that India’s growth potential – which has slowed in recent years – and that the continued decline in government debt burden and simultaneous improvement in borrowing capacity will lead to improvements. Said.

While confirming the sovereign assessment, Moody’s said recovery in Asia’s third-largest economy is underway, with rising vaccine rates posing negative risks to growth from subsequent corona virus outbreaks.

Moody’s expects India’s real GDP growth to be higher than 2019 this fiscal (April 2021 to March 2022), returning to a growth rate of 9.3 percent and 7.9 percent next fiscal.

The Indian economy contracted by 7.3 per cent in the last financial year ending March 31, 2021.

The US-based rating agency downgraded India from ‘Baa2’ in 2020, with a ‘negative’ outlook stating that there will be challenges in policy implementation as low growth and the financial situation worsen.

(This story was not edited by NDTV staff and was created automatically from a syndicate feed.)

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