‘Fundamentals of economy remain robust’: Govt responds as Moody’s cuts India’s outlook to ‘negative’
The govt statement came after Moody’s Investors Service lowered outlook on India’s ratings to ‘negative’ from ‘stable’, saying there was increasing risks that economic growth will remain materially lower than the past.Updated: Nov 08, 2019 09:54 IST
The government on Friday said the fundamentals of the economy remain quite robust with inflation under check and bond yields low. The statement came after Moody’s Investors Service lowered outlook on India’s ratings to ‘negative’ from ‘stable’, saying there was increasing risks that economic growth will remain materially lower than the past.
In an official statement, the finance ministry said India continues to offer strong prospects of growth in near and medium term.
“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 statement added.
Moody’s said India’s outlook partly reflects government and policy ineffectiveness in addressing economic weakness, which led to an increase in debt burden from already high levels.
To strengthen the economy, the government has undertaken series of financial sector and other reforms, said the statement by the finance ministry. “The Government has 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,” it added.
“While government measures to support the economy should help to reduce the depth and duration of India’s growth slowdown, prolonged financial stress among rural households, weak job creation, and, more recently, a credit crunch among non-bank financial institutions (NBFIs), have increased the probability of a more entrenched slowdown, the rating agency said in a statement.