Positive Outlook to India as Moody's Confirms Baa3 Rating
BENGALURU: Moody’s Investors Services has confirmed India with a Baa3 rating, maintaining a positive outlook on the results. It has also affirmed India’s P-3 short-term local currency rating. Moody’s Investors Services is a bond credit rating corporation. The company ranks creditworthiness of borrowers by following certain standardized ratings scale which can measure expected investor loss in adefaultevent.
In context of the current ratings revealed, Moody’s says to Economic Times (ET) that the reforms effort to date has not yet achieved the conditions which would support an upgrade to Baa2, in particular ofaccelerating private investment to support high, stable growth, without which the government's debt burden — a key constraint on the rating — is likely to remain high for a sustained period.The company has also indicated that there will be no raise in the country’s current ratings during consultation with the government
The agency further says, “Economic and institutional reforms introduced since the positive outlook was assigned, and potentially forthcoming, continue to offer a reasonable expectation that India's growth will outperform that of its peers over the medium term and that further improvements in its macro-economic and institutional profile will be achieved.”
As the country has taken important steps to strengthen India’s institutions, Moody’s expect that the measures taken will help to achieve the objectives and in turn support in an upgrade from Baa3 to Baa2. Adding to the conclusion Moody’s states, “Policy reform implementation will allow balanced growth to support a reduction in the government debt burden, currently a constraint on India's rating.”
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