Moody's retains India's sovereign rating at Baa3
Key factors such as Russia-Ukraine conflict, higher inflation, tightening global financial conditions are unlikely to derail India’s ongoing recovery from the pandemic in 2022 and 2023 says global rating agency
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- Risks from negative feedback between economy and financial system are receding
- Higher capital buffers and greater liquidity
Mumbai: The impact of the Russia-Ukraine conflict, higher inflation and tightening global financial conditions on the back of policy tightening, is unlikely to derail India's ongoing recovery from the pandemic in 2022 and 2023, Moody's said in a release on Tuesday. As per the release, India's sovereign rating has been retained by Moody's at Baa3 with a stable outlook.
"The stable outlook reflects our view that the risks from negative feedback between the economy and financial system are receding. With higher capital buffers and greater liquidity, banks and nonbank financial institutions (NBFIs) pose much less risk to the sovereign than we previously anticipated, facilitating the ongoing recovery from the pandemic. While risks stemming from a high debt burden and weak debt affordability remain, we expect that the economic environment will allow for a gradual narrowing in the general government fiscal deficit over the next few years, avoiding further deterioration in the sovereign credit profile," the release said.
