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Wednesday, October 27, 2021

Moody’s downgrades India’s sovereign rating from ‘Negative’ to ‘Stable’, citing improvement in financial sector and faster recovery

Rating agency Moody’s has increased India’s sovereign credit rating outlook from negative to stable. Moody’s has increased the rating due to the improvement in the country’s financial sector and faster recovery than expected in all sectors of the economy. In its October 5 report, Moody’s said that the sovereign rating has been stabilized from negative because it is reducing the downside risk of negative feedback between the financial system and the real economy.

Diversification and growth potential played an important role

Moody’s has assigned India Sovereign Rating “Baa3” sovereign rating, which is the lowest investment grade. It’s just one rank above junk status. It has also confirmed the country’s foreign currency and local-currency long-term issuer rating and local-currency senior unsecured rating on Baa3. The report said that the affirmation of “Baa3” rating balances India’s major credit strengths. These include a large and diversified economy and good growth prospects. The external position of the economy is good and there is also a stable domestic financing base for government debt.

Speed ​​in service sector even in September, jobs increased for the first time in 10 months

Great potential for GDP growth

Moody’s has increased it just a few days after the top officials of the Government of India demanded to upgrade the sovereign rating. However, another global rating agency S&P Global Ratings said in its May report that it does not see any change in India’s sovereign rating for the next two years. In view of the huge decline of 7.3 in the economy in 2020, Moody’s has said that the GDP in the current financial year (2021-22) will exceed the level of 2019. This time its real GDP growth can cross 9.3 percent. At the same time, in the next financial year i.e. 2022-23, it can remain at 7.9 percent.

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