Indias rating outlook stable says Moodys

By: admin
Updated: 27 Nov 2012 01:10 AM

New Delhi: Moody's on Tuesday said India rating outlook is stable
because of the country's strong economic growth along with high savings
and investment rates.

"India's Baa3 rating and stable outlook are supported by credit strengths
which include a large, diverse economy, strong GDP growth and savings, and
investment rates that exceed emerging market averages," the global rating
agency said in its 'Credit Analysis on India' report.

It, however, said the rating is constrained by the credit challenges posed
by India's poor social and physical infrastructure, low per capita income,
high government deficit and debit ratio.

The rating has also been constrained due to the country's complex
regulatory environment and a tendency towards inflation, Moody's added.

The government aims to restrict the fiscal deficit to 5.3 per cent of GDP
this fiscal. It has also announced a slew of measures to spur
infrastructure development and liberalised foreign direct investment

"However, given the delayed timing and still modest scope of these
measure, growth may remain subdued in the near term amid continued
domestic political uncertainty and a global slowdown," Moody's added.

The agency said its stable outlook on India's rating is based on "our
expectations that India's structural strengths -- a high household savings
rate and relatively competitive private sector -- will ultimately raise
the GDP growth rate from around 5.4 per cent in FY 2013 to 6 per cent or
higher in FY 2014..."

In October, Standard & Poor's had said that there was one in three
likelihood of rating downgrade for India within 24 months if the economic
growth prospects dim, its external position deteriorates, its potential
climate worsens, or fiscal reforms slow.

Earlier in April, S&P had changed the rating outlook of India from
stable to negative, reflecting the possibility of a downgrade.