Moody’s Investors Service confirmed India’s sovereign ratings at ‘Baa3’ with a stable outlook on Friday, citing significant GDP growth as contributing to gradually growing income levels.
The affirmation and steady outlook are motivated by Moody’s belief that India’s economy will continue to grow rapidly by international standards, even though potential growth has slowed in the last 7-10 years.
According to Moody, high GDP growth will help to progressively grow income levels and overall economic resilience.
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As a result, although at a high level, this will help progressive budgetary consolidation and government debt stabilization.
Furthermore, the financial sector is strengthening, easing most of the economic and contingent liability issues that had previously generated downward rating pressure, according to the report.
According to Moody, the country’s financial sector is continuing to strengthen, reducing many of the economic and contingent liability issues that have previously pushed down rating pressure.
A sustained rise in global and domestic interest rates underscores the dangers associated with India’s large debt burden and inadequate debt affordability, both of which have long been aspects of the country’s sovereign grade and are expected to stay, according to Moody’s.
It also stated that the government’s continuous emphasis on infrastructure development, as shown in the growing amount of capital expenditure in the Union budget, has resulted in real improvements in logistics performance as well as the quality of trade and transportation-related facilities.
In terms of keeping a steady view, it stated that it takes into account the likelihood that India’s fiscal metrics will steadily improve amid robust growth prospects in comparison to peers.
