Moody’s Investors Service has affirmed India’s long-term local and foreign currency issuer ratings while maintaining the stable outlook in a statement issued on Friday.

“The affirming and stable outlook is driven by Moody’s view that India’s economy is likely to grow rapidly by international standards, although potential growth has moderated over the past 7-10 years,” it said.

The credit rating agency said India’s high GDP growth will contribute to gradually rising income levels and overall economic resilience. It added that this, in turn, would support orderly fiscal consolidation and government debt stabilisation, albeit at a higher level.

Moody’s expects India’s economic growth to outpace all other G20 economies for at least the next two years, driven by strong domestic demand.

“However, it also reflects a better assessment of India’s potential growth, which has moved from less than 6 percent during the pandemic to about 6.0 percent to 6.5 percent, lower than the estimate of more than 7 percent in the middle of last year. decade,” it said.

Moody’s also said that India’s strengthening financial sector has reduced the economic and contingent liability risks that previously induced downward pressure on the rating.

It said India’s long-term local and foreign-currency issuer ratings and local-currency senior unsecured ratings remain at Baa3, while other short-term local-currency ratings are at P-3.

“If progress on India’s fiscal consolidation results in a reduction in the government’s debt burden and an improvement in debt-carrying capacity, which would materially and sustainably enhance fiscal strength, Moody’s would probably upgrade the rating,” the statement said. Will do.”

It added that the sustained rise in global and domestic interest rates highlights the risks posed by high debt burden and weak credit affordability, which are long-standing features of India’s sovereign rating and Moody’s expects them to remain Will remain

Escalation of political tensions or further weakening of checks and balances, which would undermine India’s long-term growth potential, would likely contribute to the decline.

Noting the unrest in Manipur, Moody’s said it supports a weak assessment of political risk and the quality of institutions, a reduction in civil society and political dissent due to rising sectarian tensions.


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