Mumbai: International rating agency, Moody’s Investors Service affirmed its ‘Baa3’ rating on India. The agency also it has warned of domestic political issues.
‘The Baa3 rating and stable outlook also take into account a curtailment of civil society and political dissent, compounded by rising domestic political risk,’ Moody’s said in a statement on Friday.
Also Read: Foreign exchange reserves of India surge by $700 million
‘Although elevated political polarisation is unlikely to lead to a material destabilisation of government, rising domestic political tensions suggest an ongoing risk of populist policies — including at the regional and local government levels — amid the prevalence of social risks such as poverty and income inequality, as well as inequitable access to education and basic services. Moreover, the periodic flaring of border tensions with neighbouring countries was an outlier among sovereigns assessed as having a lower overall susceptibility to political risk,’ it added.
The agency said that India is one of the fastest growing economies in the world. India’s potential growth has improved to 6-6.5% from sub-6% levels during the coronavirus pandemic. However, India’s potential growth rate remains lower than estimates in excess of 7% in the middle of the last decade.
The agency also said that without more material gains in revenue, the government will find it challenging to achieve its fiscal deficit target of 4.5% of GDP by 2025-26. The union government is aiming to reduce its fiscal deficit to 5.9% of GDP in 2023-24. As per latest data, the fiscal deficit in the first three months of the financial year stood at 25% of the full-year target.
Post Your Comments