Moody’s affirms India’s Baa3 rating, maintains ‘stable’ outlook

New Delhi [India], August 18 : Rating agency Moody's Investors Service on Friday affirmed the ‘Baa3’ rating on India and maintained a “stable” outlook.
The affirmation and stable outlook are driven by its view that India's economy is likely to continue to grow rapidly by international standards, “although potential growth has come down in the past 7-10 years.”
High GDP growth will contribute to gradually rising income levels and overall economic resilience, Moody’s said in a release.
“In turn, this will support gradual fiscal consolidation and government debt stabilization, albeit at high levels. In addition, the financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure,” it said.
Moody's expects India's economic growth to outpace all other G20 economies through at least the next two years, driven by domestic demand.
“The government's ongoing emphasis on infrastructure development, mirrored in the increasing share of capital expenditure in the Union budget, has led to tangible improvements in logistics performance and the quality of trade and transport-related infrastructure.”
Further, Moody's expects that the economic benefits of the digital public infrastructure (DPI) will materialize over time and support India's growth potential.
On maintaining a stable outlook, it said it incorporates the likelihood that India's fiscal metrics will continue to gradually improve amid robust growth prospects compared with peers.