HindustanTimes Sat,20 Dec 2014

India's inflation, fiscal metrics weaker than peers: Moody's

PTI  Mumbai, September 04, 2013
First Published: 22:59 IST(4/9/2013) | Last Updated: 23:02 IST(4/9/2013)

Moody's on Wednesday said India's sovereign rating outlook depends on the depth and extent of current slowdown along with trends in the balance of payment situation, and noted that the country's inflation and fiscal metrics are weaker than its emerging market peers.


In a presentation, Moody's analyst Atsi Seth said the slowdown appears steeper for the country with inflation and fiscal metrics weaker than its emerging market peers.

"Higher subsidy burden and lower growth will weaken fiscal metrics," it further said.

The report said the growth outlook in the US, European Union and China, interest rate outlook after the quantitative easing tapers off, and the trend in commodity prices along with domestic factors like farm output, domestic interest rates and impending elections will affect sovereign credit profile in the current fiscal.

However, on the positive note, the rating agency said that low government foreign currency debt insulates debt repayment capacity from exchange rate volatility.

Moody's also said the current reserves can finance current account and external debt repayment needs of the country.

Moody's is the only international rating agency with a stable outlook on the country at Baa3, which is the lowest investment grade rating.

The economy grew at its slowest pace in the last four years logging in a poor 4.4% in the first quarter of the current financial year.

Following the poor GDP reading in Q1, many external brokerages like Nomura, Citi and Standard Chartered slashed FY14 growth forecast to as low as 4%.

Domestic currency too is witnessing a downward trend, hovering at around 67 to the dollar.

more from Business

5.5% growth, no rate cuts till March: Mid-year review

India’s economy is likely to grow at 5.5% this year though private investments haven’t shown real signs of picking up yet, a finance ministry report said on Friday, even as it hinted that the Reserve Bank of India was unlikely to cut interest rates before March.

Most Popular
Copyright © 2014 HT Media Limited. All Rights Reserved