Moody’s lowers India’s outlook to ‘negative’ from ‘stable’; cites increased risks to economic growth recovery

If nominal GDP growth does not return to high rates, Moody’s expects that government will face very significant constraints in narrowing general budget deficit and preventing a rise in debt burden Rating agnecy Moody’s Investors Service has changed the outlook on India to negative from stable and affirmed the Baa2 foreign-currency and local currency long-term issuer ratings. Moody's changes India's outlook to negative from stable, affirms Baa2 ratings pic.twitter.com/zl4AoAtVo9 — CNBC-TV18 November 8, 2019 Moody’s decision to change the outlook to negative reflects increasing risks that economic growth will remain materially lower than in the past, partly reflecting lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses than Moody’s had previously estimated, leading to a gradual rise in the debt burden from already high levels, the release said. If nominal GDP growth does not return to high rates, Moody’s expects that the government will face very significant constraints in narrowing the general government budget deficit and preventing a rise in the debt burden. The Baa2 rating balances the country’s credit strengths including its large and diverse economy and stable domestic financing base for government debt, against its principal challenges including high government debt, weak social and physical infrastructure and a fragile financial sector.