NewDelhi : Notwithstanding the downgrading of India’s rating from stable to negative by Moody’s, the Finance Ministry has responded that India continues to be among the fastest growing major economies in the world. The economic reforms it has undertaken would lead to a positive outlook on India.
“Government of India has noted that the Moody’s Investors Service has today changed the outlook on the Government of India’s ratings to negative from stable while keeping the foreign-currency and local-currency long-term issuer ratings unchanged at Baa2. However, India continues to be among the fastest growing major economies in the world, India’s relative standing remains unaffected.IMF in their latest World Economic Outlook has stated that Indian Economy is set to grow at 6.1% in 2019, picking up to 7 % in 2020. As India’s potential growth rate remains unchanged, assessment by IMF and other multilateral organizations continue to underline a positive outlook on India” the Finance Ministry said in a press release.
“The Government has undertaken series of financial sector and other reforms to strengthen the economy as a whole. Government of India has also proactively taken policy decisions in response to the global slowdown. These measures would lead to a positive outlook on India and would attract capital flows and stimulate investments. The fundamentals of the economy remain quite robust with inflation under check and bond yields low. India continues to offer strong prospects of growth in near and medium term” it added.
Global Rating Agency Moody’s has downgraded India’s rating from stable to negative, a first step towards a slowdown. The Agency has predicted that the slowdown will be prolonged and government deficit will rise.
“Despite government measures to help reduce the depth and duration of India’s slowdown in economic growth, prolonged financial stress among rural households, weak job creation, and a credit crunch among non-bank financial institutions have increased the probability of a more entrenched slowdown. If nominal GDP growth does not return to higher rates, the government will face significant constraints in narrowing its budget deficit and preventing a rise in debt” Moody’s said.