IANS, New Delhi :
Global ratings agency, Moody’s Investors Service has cut India’s outlook to negative from stable on increasing risks of lower economic growth than the past and reflecting lower government effectiveness at addressing long-standing economic and institutional weaknesses.
Moody’s has changed the outlook on the Government of India’s ratings to negative from stable and affirmed the Baa2 foreign-currency and local currency long-term issuer ratings. Moody’s also affirmed India’s Baa2 local-currency senior unsecured rating and its P-2 other short-term local-currency rating.
India’s credit rating at Baa2 is the second lowest investment rating and Moody’s has warned that India could be heading for a debt trap and recessionary phase.
The negative outlook indicates that an upgrade is unlikely in the near term. Moody’s would likely change the rating outlook to stable if the likelihood that fiscal metrics would stabilize and improve over time increased significantly.
Moody’s would likely downgrade India’s ratings if its fiscal metrics were increasingly likely to weaken materially. This would probably happen in the context of a prolonged or deep slowdown in growth, with only limited prospects that the government would be able to restore stronger growth through economic and institutional reforms
Looking forward, Moody’s said potential GDP growth and employment generation will remain constrained unless reforms are advanced to directly reduce restrictions on the productivity of labour and land, stimulate private sector investment, and sustainably strengthen the financial sector.
“Moody’s considers the prospects for effective implementation of such reforms to have diminished since its upgrade of India’s sovereign rating in 2017. In the absence of such reforms, structural constraints on productivity and job creation, will weigh further on India’s sovereign credit profile,” it added.
Moody’s has attributed the negative outlook on lower economic growth and lack of effective government policy to address macro issues which will in turn lead to a spike in the debt burden of the country.
Global ratings agency, Moody’s Investors Service has cut India’s outlook to negative from stable on increasing risks of lower economic growth than the past and reflecting lower government effectiveness at addressing long-standing economic and institutional weaknesses.
Moody’s has changed the outlook on the Government of India’s ratings to negative from stable and affirmed the Baa2 foreign-currency and local currency long-term issuer ratings. Moody’s also affirmed India’s Baa2 local-currency senior unsecured rating and its P-2 other short-term local-currency rating.
India’s credit rating at Baa2 is the second lowest investment rating and Moody’s has warned that India could be heading for a debt trap and recessionary phase.
The negative outlook indicates that an upgrade is unlikely in the near term. Moody’s would likely change the rating outlook to stable if the likelihood that fiscal metrics would stabilize and improve over time increased significantly.
Moody’s would likely downgrade India’s ratings if its fiscal metrics were increasingly likely to weaken materially. This would probably happen in the context of a prolonged or deep slowdown in growth, with only limited prospects that the government would be able to restore stronger growth through economic and institutional reforms
Looking forward, Moody’s said potential GDP growth and employment generation will remain constrained unless reforms are advanced to directly reduce restrictions on the productivity of labour and land, stimulate private sector investment, and sustainably strengthen the financial sector.
“Moody’s considers the prospects for effective implementation of such reforms to have diminished since its upgrade of India’s sovereign rating in 2017. In the absence of such reforms, structural constraints on productivity and job creation, will weigh further on India’s sovereign credit profile,” it added.
Moody’s has attributed the negative outlook on lower economic growth and lack of effective government policy to address macro issues which will in turn lead to a spike in the debt burden of the country.
