Moody’s Credit Rating for India
Posted on : 23 Jan 2020
Views: 444- Moody’s Investor Service, which is a leading provider of credit ratings, research, and risk analysis has changed its outlook for India’s sovereign rating(Baa2) from stable to negative, saying that the domestic economic downturn could be structural.
- The agency’s action does not amount to a rating downgrade but comes as a caution against policy inaction.
- Moody’s credit rating of Baa2, the second-lowest investment grade score, is better than those of other agencies, such as S&P and Fitch, who have assigned the lowest investment grade to India with a stable outlook.
- Moody’s forecast predicted a 6.6 per cent of GDP growth for the current fiscal year.
- The agency projected a fiscal deficit of 3.7 per cent of GDP in the current financial year, compared to the budgeted target of 3.3 per cent.
- India’s ratings were upgraded to Baa2 from Baa3 in 2017 citing progress on 'economic and institutional reforms’.
- Rating agencies are ultra-sensitive to fiscal deficit overruns but the positive factor here is that India’s borrowings are almost wholly domestic.
- External debt to GDP is just 20% but the ratings do have an impact on investor sentiment.
Article Related Questions
-
Consider the following statements regarding the recent credit rating released by Moody’s Analytics for India
1.It lowered back India’s credit rating from Baa2 to Baa3 in 2019.
2.It predicted a fiscal deficit of 3.7% of GDP as against the 3.3% set for the current financial year.
Which of the above statements is/are correct?
1.1 only
2.2 only
3.Both 1 and 2
4.Neither 1 nor 2
Right Ans : 2 only
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Dec 15,2020 3:39 pm