Global rating agency Moody's has reaffirmed a stable outlook for the Government of India's sovereign ratings, keeping the country's long-term and short-term ratings at Baa3 and P-3, respectively.
In its latest assessment, Moody's highlighted India's stable outlook, citing the potential for gradual improvement in fiscal metrics supported by robust growth prospects compared to its peers.
Moody’s ratings are as follows:
· Aaa: Smallest degree of risk
· Aa (Aa1, Aa2, Aa3): Very low credit risk
· A (A1, A2, A3): Low credit risk
· Baa1, Baa2, Baa3: Moderate credit risk
· Ba1, Ba2, Ba3: Questionable credit quality
· B1, B2, B3: High credit risk
· Caa1, Caa2, Caa3: Very high credit risk
Moody's report emphasized India's large and diversified economy, high growth potential, relatively sound external position, and stable domestic financing base for government debt. However, it also noted challenges such as high general government debt, weak debt affordability, and low per capita income.
Despite these challenges, Moody's noted India's resilience, particularly in its emergence from the pandemic with a stronger and more stable economy. The agency acknowledged progress in infrastructure development, digitalization, and financial system rehabilitation as factors contributing to India's economic resilience.
Moody's revised India's real GDP growth projection to 8% for the fiscal year 2023-24, following a series of strong growth numbers in the first three quarters. The agency expects sustained economic growth well above 6% over the next two fiscal years, with upside risks to the projections.
The rating review, conducted by Moody's through a rating committee held on April 4, 2024, affirmed India's economic growth prospects.
In a previous report released in March, Moody's anticipated India's economic growth in 2024-25 to surpass that of other emerging market G20 peers, driven by robust domestic demand.
India's GDP growth remained resilient, expanding by 8.4% during the October-December quarter of the current fiscal year, solidifying its position as the fastest-growing major economy.
Growth rates of 7.8% and 7.6% were recorded in the preceding two quarters, April-June and July-September, respectively.
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