Govt reacts strongly to Moody’s change in outlook
Moody's Investors Service has cut India's ratings outlook to 'negative' from 'stable'. The rating agency cited increasing risks that growth in Asia's third-largest economy will remain lower than in the past
The fundamentals of Indian economy remains robust with inflation under check and bond yields low, the finance ministry said in a statement, in response to Moody’s Investors Service lowering the outlook on India's rating."India continues to supply sturdy prospects of growth in close to and medium term," the finance ministry added.
Moody's cited increasing risks that growth in Asia's third-largest economy will remain lower than in the past for lowering its outlook. The ratings agency however retained India's foreign and local currency ratings at 'Baa2'.
India's economic growth fell to 5.0% year-on-year in the June quarter, the slowest since 2013. "While government measures to support the economy should help to reduce the depth and duration of India's growth slowdown, prolonged financial stress among rural households, weak job creation, and, more recently, a credit crunch among non-bank financial institutions have increased the probability of a more entrenched slowdown," Moody's said.
The finance ministry said that the government has undertaken series of financial sector and other reforms to strengthen the economy as a whole. "Government of India has conjointly proactively taken policy selections in response to the worldwide lag. These measures would cause a positive outlook on Bharat and would attract capital flows and stimulate investments," it added.
The ministry also reiterated that India continues to be among the fastest growing major economies in the world and "India’s relative standing remains unaffected".
"IMF in their latest World Economic Outlook has explicit that Indian Economy is ready to grow at six.1% in 2019, picking up to 7 % in 2020. As India’s potential rate remains unchanged, assessment by UN agency and different multipartite organizations still underline a positive outlook on Bharat," the finance ministry aforesaid.