New Delhi, November 22
Moody’s Investors Service on Tuesday said the trend of gradual fiscal consolidation remains intact for India and going forward the country will see strong revenue performance and debt stablisation.
Moody’s Investors Service senior vice-president Christian de Guzman said India’s ‘Baa3’ sovereign rating balances its strength of relatively high economic growth and weakness of one of the most highly indebted emerging market sovereigns. The country’s healthy financial system is reflected in deleveraging by Indian corporates.
“We expect that India is going to be the fastest growing G20 economy next year… (but) high inflation pose a downside risk to India’s growth as households and businesses have less purchasing power,” Guzman said in a Moody’s virtual event ‘Sovereign Deep Dive’.
Moody’s had earlier this month cut India’s growth projection for 2022 to 7%, from 7.7% projected earlier. It expects growth to decelerate to 4.8% in 2023 and then to rise to around 6.4% in 2024. The Indian economy grew 8.5% in 2021.
It projected GDP growth of the G20 economies to decelerate to 1.3% in 2023, significantly lower than its previous estimate of 2.1%.
Guzman said further improvement with regard to fiscal situation and a faster- than-expected pace of fiscal consolidation leading to substantial debt reduction would translate into a positive rating pressure on India.
Moody’s had in October 2021 raised India’s sovereign rating outlook to ‘stable’, from ‘negative’, while affirming the ‘Baa3’ rating — which is the lowest investment grade, just a notch above junk status.
“We have seen over the past couple of years that there is some revenue bouyancy … Revenue performance has been relatively strong. We think the trend of gradual fiscal consolidation does remain intact… There is going to be a stabilisation of debt… We don’t see debt creeping back significantly again,” Guzman said. — PTI
Expects Growth at 4.8% in 2023
- Moody’s had earlier this month cut India’s growth projection for 2022 to 7%, from 7.7% projected earlier
- It expects growth to decelerate to 4.8% in 2023 and then to rise to around 6.4% in 2024
- It had in October 2021 raised India’s sovereign rating outlook to ‘stable’, from ‘negative’, while affirming the ‘Baa3’ rating