Rating agency sees risks to growth, govt says growth prospects remain strong
GN Bureau | November 8, 2019
The global rating agency Moody’s Investors Service has changed its outlook on India’s ratings from ‘stable’ to ‘negative’, but the finance ministry maintained that “the fundamentals of the economy remain quite robust”.
On Thursday, Moody’s underlined risks that Indian economy will witness lower growth than in the recent past. The decision reflects its perception that the government policy has not been effective in addressing economic weaknesses.
This prompted the finance ministry to issue a statement on Friday morning, saying, “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.”
The government also highlighted the fact that Moody’s had kept the foreign-currency and local-currency long-term issuer ratings unchanged at Baa2.
“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 noted.
It also referred to the series of reforms in finance and other sector to strengthen the economy as a whole. It added that the government had 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 finance ministry said.
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