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Moody’s outlook on India ‘negative’, govt says fundamentals in place

Indian Prime Minister Narendra Modi (C) celebrates victory at the Bharatiya Janata Party (BJP) headquarters in New Delhi, India, on May 23, 2019. Indian Prime Minister Narendra Modi announced his Bharatiya Janata Party's victory in the just-concluded 17th general elections on Thursday. (Xinhua). Sketched by the Pan Pacific Agency.

Pan Pacific Agency | COMMUICATION AGENCY FOR PACIFICA REGIONS

NEW DELHI, Nov 8, 2019, PTI. Moody’s Investors Service has changed the outlook on India’s ratings to ‘negative’ from ‘stable’, saying there was increasing risks that economic growth will remain materially lower than the past, The Asian Age reported.

It affirmed the Baa2 foreign-currency and local-currency long-term issuer ratings for India.

“Moody’s decision to change the outlook to negative reflects increasing risks that economic growth will remain materially lower than in the past, partly reflecting lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses than Moody’s had previously estimated, leading to a gradual rise in the debt burden from already high levels,” the rating agency said in a statement.

While government measures to support the economy should help to reduce the depth and duration of India’s growth slowdown, prolonged financial stress among rural households, weak job creation, and, more recently, a credit crunch among non-bank financial institutions (NBFIs), have increased the probability of a more entrenched slowdown, it said.

“Moreover, the prospects of further reforms that would support business investment and growth at high levels, and significantly broaden the narrow tax base, have diminished,” it said.

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