Wednesday, February 24, 2021
Home India Corruption, uncertain policies remain key concerns on India: Moody

Corruption, uncertain policies remain key concerns on India: Moody

Fiscal consolidation and moderate inflation are definite pluses for India, but graft, uncertain policies and their weak execution remain key constraints, according to Moody’s Investors Service.

In an e-mail interview with IANS, Marie Diron, senior vice president for the Sovereign Risk Group, said the agency’s assessment of India is based on its own evaluation, as also that of the World Bank on government’s effectiveness, rule of law and inflation control. This is what she said:

“India’s score are in the moderate range, reflecting checks and balances between the executive, legislature and judiciary, and increasing fiscal and monetary policy transparency,” she said.

“However, corruption, policy uncertainties and slow implementation have constrained our assessment of India’s institutional strength.”

Moody’s also expected fiscal consolidation to be gradual — as a result of specific measures on which a consensus can be reached, rather than broad-ranging fiscal strategies. So high levels of government debt, at around 65 percent of GDP, will continue to be a constraint on India’s rating.

“Besides the implications of fiscal policy for the government debt burden, the broad macroeconomic policy context has become more favourable to sustain growth. The government’s repeated commitment to fiscal consolidation contributes to maintaining inflation at moderate level.”

On the external sector, Diron said the impact on India of China’s rebalancing, the general and economic developments there will be mainly indirect. This because the share of India’s exports to China is much lower — around 3.7 percent — than for some other economies in the region.

“As a result, India would be affected by a slowdown in Chinese demand mainly to the extent that the global economy would be affected. Moreover, if such a slowdown were to lead to renewed falls in commodity prices, India as an importer of commodities would benefit,” Diron said.

“Further, China’s rebalancing may contribute to global volatility in capital flows. However, with narrower current account deficit financed by foreign direct investment, India is less vulnerable to a shift in investor sentiment and global capital flows than it would have been few years ago.”

Related article:Economic conditions of India remains weaker than peers: Moody

Diron’s assessment comes against the backdrop of the caution by Moody’s Investors Service that a prolonged worsening in asset quality of state-run banks was the main threat to India’s sovereign credit profile, while suggesting that the government must recapitalise them with more money.

Moody’s, which has given for India a credit rating at ‘Baa3’ — or just a level above the junk category — had said on Wednesday that it would consider a rating upgrade after 12-18 months, depending on improvement in macroeconomic parameters in India.

Nonetheless, its outlook on the country remained positive.

“Our positive outlook on India’s rating is based on our expectations of continued but gradual policy efforts to reduce the sovereign risks posed by high fiscal deficits, volatile inflation and weak bank balance sheets.” (IANS)

STAY CONNECTED

19,120FansLike
362FollowersFollow
1,773FollowersFollow

Most Popular

Study: Teens May Be More Likely To Be Bullied By Their Friends

Adolescents and teens may be more likely to be bullied by their friends or friends-of-friends than peers who are not closely linked, a new...

10 Health Benefits Of Mint Leaves That One Must Know

Pudina (mint) is one of the oldest culinary herbs known to humans. It has remarkable medicinal properties and is a rich source of polyphenols....

The Job Market Still Looks Bleak In India After A Pandemic-Hit 2020

While the job market still looks bleak in India after a pandemic-hit 2020, the world's professional network LinkedIn said on Wednesday it has seen...

How The 2021 Union Budget Can Impact The Share Market In Future

By Prajakta Pingulkar Share market for beginners is a whole new territory to explore. The market speculation going throughout the year puts many new investors...

Light Intensity Physical Activity May Protect Mobility In Older Women

Light-intensity physical activity, including gardening, shopping, or a casual walk may protect mobility in older women, suggests a new study. The study indicated that...

Fat Cells May Influence How Body Reacts To Heart Failure

Limiting the amount of fat the body releases into the bloodstream from fat cells during heart failure could help improve outcomes for patients, say,...

An Initiative For A Drug Free India

Every year, the birth anniversary of Mahatma Gandhi is observed as National Anti-Drug Addiction Day to honor his commitment towards eradicating the menace of...

A Therapy To Rescue You From Depression And Out Of Work Load

If depression is making it more difficult for some unemployed people to land a job, one type of therapy may help, research suggests. The...

Recent Comments