The American credit rating agency – Moody’s Corporation, has maintained a stable credit outlook on India, saying that it “doesn’t see a rating downgrade as growth slowdown is not irreversible”.

This rating stability offers a much-needed boost to India since other credit rating agencies have been revising ratings down, on account of government deficits and lack of movement in economic reforms. “Recent actions by India to undertake key reforms showed some determination to take unpopular steps” said Atsi Sheth, a sovereign risk analyst at Moody’s Investors Service. Economic growth is expected to move up from the 5.5 percent of the first quarter due to consumer demand and the paring of the subsidy bill.

Sheth further affirmed that despite the recent subsidy reduction program, India will overshoot its fiscal deficit target. In line with this discussion about the fiscal target, chief economic adviser; Raghuram Rajan explained that “Trade is around 40-45 percent of our GDP and hence the global slowdown greatly affects the India story too”. Moody’s went on to further suggest that a credit challenge for India is its fiscal positions and that can come into good shape with some strong economic reforms.

Source: The Financial Express