Connect with us

Economy

Moody’s Rating Of India’s Economy From ‘Stable’ to ‘Negative’ May Have Limited Impact

Published

on

Credit rating agency Moody’s Investors Service has changed its outlook for India’s sovereign rating from stable to negative, saying that the domestic economic downturn could be structural.

China Effect : India Commits $200 Million To Tiny African Nation, Rwanda

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.

The rating agency said that this outlook partly reflects the government’s inability to overcome the economic slowdown, due to which the burden of debt has already increased on India, which is already under heavy debt.

Two years ago, Moody’s had rated India’s rating as Baa3 to Baa2 but in its new report Moody’s wrote –  “Despite the Indian government’s measures to deepen the economic slowdown in the country and prevent this period from being prolonged, rural households long-term effects on income, weak job creation and growing credit crisis in non-banking financial institutions increased the possibility of economic slowdown Land.”

India To Emerge 3rd Biggest Economy Surpassing Japan and Germany by 2030

The agency wrote that “If the nominal increase in GDP rate does not return to its high rate, the government will face significant hurdles in reducing difficulties such as budgetary deficit and curbing mounting debt.”

India’s economy grew by only 5% between April and June. The reason for this has been attributed to differences in global trade, consumer demand and decrease in government spending. Moody’s dropped the rating to Baa3 during the UPA government in 2004 but it was raised to Baa2 in the first term of the Modi government in November 2017.

However, Moody’s has been raising questions about GDP, demonetisation, non-performing assets (NPAs) in the past. And during the last few days, Moody’s reduced the projected growth rate of India’s Gross Domestic Product (GDP) for the year 2019-20 to 5.8 per cent from 6.2 per cent earlier.

Moodies ratingImage copyright MOODY

What is Credit rating?

It is difficult for any foreign or domestic company to assess what is the fundamental state of the economy in India or any other country. In such a situation, companies make their investment plans depending on the credit rating of that country.

It is believed that the credit rating agency gives a rating in every particular country, looking at every dimension there. They make this rating based on the political situation, policy framework, import-export and their ability to compete internationally.

Credit rating agencies then give different tags to those countries. Moody’s gives an A, B and an estimated C rating. Aaa is considered the best and C is the worst rating. Based on this rating, companies make their investment plans. However, these ratings are only a factor of assessment for investing.

Advertisement
Advertisement

Facebook

FEATURED

INDIA-CHINA INDIA-CHINA
Asia Pacific15 mins ago

China Could Soon Deploy ‘Unmanned Helicopters’ As Tensions Mount With India

With the diplomatic and military talks in progress between the high ranking officials of New Delhi and Beijing, Indian and...

Capital-of-Israel-Jerusalem Capital-of-Israel-Jerusalem
Featured1 hour ago

Three Islamic Countries That May Never Recognize Israel Despite The Acceptance Of Saudi Arabia?

The big picture of Israel-UAE formalising their ‘diplomatic relations’ was well on the cards as what has been proven by...

missile missile
Featured3 hours ago

Russian & Israeli Origin Missiles Deployed In Ladakh As India Looks To Keep China At Bay

Amid heightening tensions in Eastern Ladakh with China, India has reportedly deployed BrahMos and Nirbhay cruise missiles along with Akash...

C-17-GLOBEMASTER C-17-GLOBEMASTER
Expert Reviews3 hours ago

Not Rafale Jets, But C-17 Globemasters Will Be The Real ‘Game Changer’ In India-China Clash At Ladakh

With neither of the two neighbours India or China ready to put their sword down, Ladakh continues to become a...

BALOCHISTAN BALOCHISTAN
Featured8 hours ago

Afghan Peace Talks: Afghanistan’s Chief Peace Negotiator Lands In Pakistan

Afghan Peace Talks: Abdullah Abdullah will meet Pakistan’s President Arif Alvi, Prime Minister Imran Khan, Foreign Minister Shah Mehmood Qureshi,...

INDIAN-NAVY INDIAN-NAVY
Expert Reviews9 hours ago

Three Regions Where India Is Silently ‘Choking’ China & A Furious Beijing Has No Answer?

While China is finding itself getting entangled in serious standoffs with several countries including India and the US, it is...

LASER-WEAPONS LASER-WEAPONS
Americas11 hours ago

DRDO Accelerates Work On ‘Laser Weapons’; But Where Does India Stand Against China, Russia & The US?

There might be a possibility that future global conflicts including between India and China could be fought with Star Wars-type...

turkey-Pakistan-ties turkey-Pakistan-ties
EurAsian Region12 hours ago

Turkey, Pakistan Vow Full Support To Azerbaijan Against Armenia; US, Iran Call For De-Escalation

The Middle East and Asian nations expressed their concern over escalating clashes between Armenian forces and Azerbaijani military in the...

F-35-INDIA F-35-INDIA
Americas24 hours ago

Massive Loophole Detected In ‘Stealth’ F-35 Fighter Jets; Exposes The Limitations Of The Mighty F-35s

The Lockheed Martin F-35 Lightning II is a single-seat, single-engine, all-weather stealth multirole combat aircraft designed to perform both air...

Armenia-Azerbaijan Armenia-Azerbaijan
EurAsian Region1 day ago

Armenia Declares Martial Law, Prepares For A Possible War As Border Conflict Escalates With Azerbaijan

Due to flaring tensions between Armenia and Azerbaijan over the region of Nagorno-Karabakh, Armenia on Sunday declared martial law and...

Advertisement