Relief for Government as Moody retained India’s rating

Sydney: Despite the falling Ruppe and Slowdown in Economy, Global Rating agency Moody today retained outlook on India’s rating at stable, saying that it is unlikely to be even a medium-term feature.
The announcement should come as a relief for Indian Government, who have been battling severe criticism after two global ratings agencies Standard & Poor’s and Fitch revised their outlook on India’s rating to negative from stable, citing slowdown in growth, weak public finances, lack of economic reforms and stalled policies.

In fact S&P had cautioned that India could be the first country among the BRIC (Brazil, Russia, India and China) group to lose its investment grade rating.
Moody’s Investors Service in a statement said, “It is maintaining its stable outlook on India’s rating as 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 are already incorporated into the current Baa3 rating”.
But Moody’s said global and domestic factors, including potential shocks in agriculture, could keep India’s growth below trend for the next few quarters. Growth in the January-March quarter of 2012 slowed to a nine-year low of 5.3%, while overall growth in 2011-12 slowed to 6.5%, below the initial estimate of 6.9%, raising alarm bells and prompting calls for urgent action to revive growth.
Although, Moody’s expects that global and domestic factors, including potential shocks in agriculture, could keep India’s growth below trend for the next few quarters.