India's sovereign outlook stable: Moody's
04 May 2013
Global rating agency Moody's has said India's sovereign outlook remained stable and did not warrant any action on the country's credit rating in the next 12-18 months.
"We feel the outlook (on India) is stable. We do not see ratings movement up or down in the next 12-18 months," Moody's Sovereign Ratings VP and lead analyst (India) Atsi Sheth said on the sidelines of Asian Development Bank's annual meet in Greater Noida, according to an agency report.
According to Sheth, the rating agency had already incorporated the possibility of an improvement in India's growth in its current rating outlook.
India's credit rating had been reaffirmed by Moody's at 'Baa3', which indicated investment grade, with a stable outlook. The rating agency had though, cautioned that a high fiscal deficit could pull down the growth in the coming years.
The agency expected the downturn would be extended if that was what the world was going through right now. However, it expected that as conditions improved globally and the domestic situation also improved, growth too would see an upward trajectory, Sheth added.
Representatives from the agency are expected to meet officials of the finance ministry next week, where the ministry would be pitching for a rating upgrade.
Moody's expected 6 per cent growth for the Indian economy in 2013-14. India's economic growth was said to have slowed to a decade low of 5 per cent in 2012-13.
Meanwhile, Sheth told Business Standard's Indivjal Dhasmana that she did not foresee any movement from the current grade in the next 12-18 months.
Business Standard featured excerpts from the interaction in which she was asked whether she found merit in India's demand that rating agencies should upgrade its rating in the light of the reforms on the FDI front and initiatives to bring down fiscal deficit?
In response Sheth said based on several decades of India's economic and policy history, the agency expected policies to change slowly in general, with occasional periods and pockets of accelerated implementation. What was in evidence at the present juncture was an acceleration in policy implementation in some areas, but continued uncertainty in others, she said, adding that it was in line with the agency's expectation.
She said as indicted by its stable outlook, the agency did not anticipate an upward or downward change in India's Baa3 (the lowest investment grade) rating over the next 12-18 months.
In response to a question as to why Moody's retained India's outlook as stable, unlike its two peers - Standard & Poor's and Fitch - which have lowered it, she said Moody's rating outlook would change if economic or policy trends in a country differed meaningfully from what we had foreseen.
Moody's also recognised India's GDP growth rate was markedly lower in FY13 than in previous years. But this slowdown, she added, was not different from what occurred elsewhere in the world.
In fact, she said, even during the slowdown, India's growth rate remained above that in most similarly rated peers.
''India's rating reflects its credit profile on a global scale - that is, based on an analysis of credit metrics vis-à-vis other countries, rather than against India's own history. Lastly, we did not believe that the slowdown in India was irreversible.''