Will improve India’s rating if growth potential increases and debt falls: Moody’s

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Moody’s expects India’s real GDP to exceed 2019 levels in this fiscal year (April 2021 to March 2022).

New Delhi: Moody’s Investors Service said on Wednesday it would raise India’s rating if growth potential rises and public debt falls steadily.

The US-based rating agency on Tuesday raised the outlook for India’s sovereign rating to “stable” from “negative”, while affirming the “Baa3” rating, which is the highest investment rating. lower, just a cut above junk status.

Also read: Moody’s Changes Outlook for Indian Banks and Businesses from Negative to Stable

Christian de Guzman, senior vice president of Moody’s Investors Service, Sovereign Risk Group, told PTI that the “stable” outlook reflects the view that it would take around 12 to 18 months for Moody’s to raise its sovereign rating. India.

“We said that an increase in India’s growth potential – which has eroded in recent years – and a sustained decline in the public debt burden as well as a simultaneous improvement in debt accessibility could lead to an upgrade. Our stable outlook reflects the view that these triggers will not be met in the next 12-18 months, “Guzman said in an email interview.

While affirming the sovereign rating, Moody’s had said that a recovery was underway in Asia’s third-largest economy, with downside risks to the growth of subsequent waves of coronavirus infection mitigated by rising rates of vaccination.

Moody’s expects India’s real GDP to surpass 2019 levels in this fiscal year (April 2021 to March 2022), rebounding to a growth rate of 9.3%, followed by 7.9% in the next fiscal year.

The Indian economy contracted 7.3% in the most recent fiscal year ended March 31, 2021.

The US-based rating company had downgraded India’s rating to “Baa2” in 2020, with a “negative” outlook indicating that there would be challenges in implementing policies amid a low environment. growth and deteriorating fiscal position.

(This story was not edited by NDTV staff and is auto-generated from a syndicated feed.)

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