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Rating agency Moody's changes its outlook on India rating to negative citing lower economic growth

While government measures to support the economy should help to reduce the depth and duration of India's growth slowdown, prolonged financial stress among rural households, weak job creation, and, more recently, a credit crunch among non-bank financial institutions (NBFIs), have increased the probability of a more entrenched slowdown, the rating agency said.

PTI Reported by: PTI New Delhi Published on: November 08, 2019 10:17 IST
Rating agency Moody's changes its outlook on India rating
Image Source : AP

Rating agency Moody's changes its outlook on India rating to negative citing lower economic growth

 Moody's Investors Service has changed the outlook on India's ratings to 'negative' from 'stable', saying there was increasing risks that economic growth will remain materially lower than the past. It affirmed the Baa2 foreign-currency and local-currency long-term issuer ratings for India. 

"Moody's decision to change the outlook to negative reflects increasing risks that economic growth will remain materially lower than in the past, partly reflecting lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses than Moody's had previously estimated, leading to a gradual rise in the debt burden from already high levels," the rating agency said in a statement.

While government measures to support the economy should help to reduce the depth and duration of India's growth slowdown, prolonged financial stress among rural households, weak job creation, and, more recently, a credit crunch among non-bank financial institutions (NBFIs), have increased the probability of a more entrenched slowdown, it said.

"Moreover, the prospects of further reforms that would support business investment and growth at high levels, and significantly broaden the narrow tax base, have diminished," it said.

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