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India's rating outlook stable, says Moody's

New Delhi, Nov 27, 2012, (PTI) : 12:28 IST
Moody's today said India rating outlook is stable because of the country's strong economic growth along with high savings and investment rates.

"India's Baa3 rating and stable outlook are supported by credit strengths which include a large, diverse economy, strong GDP growth and savings, and investment rates that exceed emerging market averages," the global rating agency said in its 'Credit Analysis on India' report.

It, however, said the rating is constrained by the credit challenges posed by India's poor social and physical infrastructure, low per capita income, high government deficit and debit ratio.

The rating has also been constrained due to the country's complex regulatory environment and a tendency towards inflation, Moody's added.

The government aims to restrict the fiscal deficit to 5.3 per cent of GDP this fiscal. It has also announced a slew of measures to spur infrastructure development and liberalised foreign direct investment norms.

"However, given the delayed timing and still modest scope of these measure, growth may remain subdued in the near term amid continued domestic political uncertainty and a global slowdown," Moody's added.

The agency said its stable outlook on India's rating is based on "our expectations that India's structural strengths -- a high household savings rate and relatively competitive private sector -- will ultimately raise the GDP growth rate from around 5.4 per cent in FY 2013 to 6 per cent or higher in FY 2014..."

In October, Standard & Poor's had said that there was one in three likelihood of rating downgrade for India within 24 months if the economic growth prospects dim, its external position deteriorates, its potential climate worsens, or fiscal reforms slow.

Earlier in April, S&P had changed the rating outlook of India from stable to negative, reflecting the possibility of a downgrade

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