Moody's keeps India's rating outlook 'stable'

Moody's Investors Service has kept India's sovereign rating 'stable' at the current level of `Baa3', saying the recent slowdown in economic growth was not irreversible. Moody's has kept India's sovereign credit rating outlook at `Baa3' over the medium term.

Moody's said its assessment of India's sovereign rating has not been affected by the recent policy changes announced by the government, aimed at bringing in foreign capital.

These measures would still leave the country's fiscal deficit  unchanged, Atsi Sheth, vice-president, Sovereign Risk Group at Moody's, said, adding that India's fiscal deficit would likely still exceed the country's target.

Sheth said the country's fiscal deficit could overshoot the target of 5.1 per cent of gross domestic product for the 2012-13 fiscal year ending March.
He, however, said the recent actions like the fuel price hike by the government to undertake key reforms showed some determination to take unpopular steps.

"It does show the government is ready to embrace policy changes that may not be politically popular, but in the end move towards raising prices to levels commensurate with what they are globally," she said.

According to Moody's the plus point for the Indian economy is the still-high consumer demand which, it hopes, will drive economic growth.