Mumbai, June 25: Global rating agency Moody’s Investors Services bucked the trend today when it chose to maintain a stable outlook on India’s Baa3 rating.
Moody’s move restores some faith in the UPA government that was rattled after Standard and Poor’s and Fitch Ratings lowered their ratings for India to negative.
Moody’s said various credit challenges such as weak fiscal performance, tendency towards inflation and an uncertain investment policy environment, have characterised the Indian economy for decades. And this has already been incorporated into the rating.
Significantly, it went on to add that certain recent negative trends that include lower growth, slowing investment and poor business sentiment are unlikely to become permanent or even medium-term features of the Indian economy.
However, it noted that global and domestic factors, including potential shocks in agriculture, could keep the country’s growth below trend for the next few quarters.
On rupee depreciation, Moody’s said it did not raise the government’s own debt service burden significantly.
“The decline does not raise the government’s debt service burden significantly, as most of its foreign currency debt is owed to multilateral and bilateral creditors with low annual repayment requirements,” it said.