New Delhi: Moody’s Investors Service on Wednesday said it will upgrade India’s rating if growth potential continues to increase and government debt continues to decline.
The US-based rating agency on Tuesday upgraded India’s sovereign rating outlook from ‘negative’ to ‘stable’, while reaffirming its ‘Baa3’ rating – the lowest investment grade, a notch from junk status. is above.
Also read: Moody’s changes outlook of Indian banks, corporates stable from negative
Christian de Guzman, Senior Vice President, Sovereign Risk Group, Moody’s Investors Service, told PTI that the ‘stable’ outlook reflects the outlook that it will take around 12-18 months for Moody’s to upgrade India’s sovereign rating.
“We have stated that India’s growth potential – which has eroded in recent years – and a sustained decline in the government debt burden as well as a concurrent improvement in debt affordability could upgrade. Our stable outlook supports this approach. indicates that these triggers will not be met over the next 12 to 18 months,” Guzman said in an email interview.
Reaffirming the sovereign rating, Moody’s had said that Asia’s third-largest economy is recovering, with the risk of growth slowing from subsequent waves of coronavirus infections, which are being mitigated by increases in vaccination rates. .
Moody’s expects India’s real GDP to surpass 2019 levels this fiscal (April 2021 to March 2022) at 7.9 per cent after a 9.3 per cent growth in the next fiscal.
The Indian economy contracted by 7.3 per cent in the last fiscal year ended March 31, 2021.
The US-based rating firm downgraded India’s rating from ‘Baa2’ to ‘negative’ in 2020, saying there will be challenges in policy implementation amid low growth and deteriorating fiscal situation.
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