India outlook: Moody's defies S&P, Fitch
Moody's Investors Service in a statement said, "It is maintaining its stable outlook on India's rating as various credit challenges -- such as weak fiscal performance, tendency towards inflation and an uncertain investment policy environment -- have characterised the Indian economy for decades, and are already incorporated into the current Baa3 rating".
On the other hand, it said that certain recent negative trends -- such as lower growth, slowing investment and poor business sentiment -- are "unlikely to become permanent or even medium-term features of the Indian economy".
Although, Moody's expects that global and domestic factors, including potential shocks in agriculture, could keep India's growth below trend for the next few quarters.
India's GDP growth rate slowed to 6.5 per cent in 2011-12 against 8.4 per cent in the previous two financial years. The government expects the economic growth in the current fiscal at around 7.6 per cent.
Moody's retaining India's outlook comes against the backdrop of two other leading agencies - Standard and Poor's and Fitch lowering the credit rating outlook to negative.
On the rupee's sharp depreciation in the recent months, Moody's said it does not raise the government's own debt service burden significantly.
The BSE 30-scrip index Sensex was trading higher by 130.54 points at 17,103.05 at 10.40 hrs.
The government's foreign currency debt comprises only 5.3 per cent of its total debt and is equivalent
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