Business
Economic recovery, fiscal improvement would be credit-positive: Moody's
Chennai, March 11
Maintaining its outlook on
India's 'Baa3' rating as stable, global credit rating agency Moody's
Investors Service said on Wednesday that an economic recovery along with
fiscal improvement will be credit-positive.
In its 'Credit
Opinion on India' report, Moody's said: "The outlook on India's Baa3
rating is stable, reflecting the balance between credit support offered
by India's favourable growth prospects and the credit risks from India's
inflation, infrastructure and fiscal metrics, which are weaker than
similarly rated peers."
According to Moody's, an economic growth
recovery accompanied by improvement in fiscal, inflation and balance of
payments metrics would be credit-positive.
A reduction in
infrastructure bottlenecks and regulatory red tape would raise potential
growth and competitiveness -- this would also be credit-positive.
Moody's
said a rating downgrade would be triggered by a further worsening of
India's fiscal position or rising contingent liabilities from the
state-owned banking sector or an increase in balance of payments risks.
On
India's credit strength, Moody's listed out its large diversified
economy, healthy private savings rate and agile private corporate
sector.
According to Moody's, the credit challenges include high
government debt and deficits; weak physical and social infrastructure;
recurrent inflation and regulatory uncertainty and complexity.