Moody`s cuts India outlook to negative |
India`s credit rating outlook was cut to negative from stable by Moody`s Investors Service on concern the government won`t be able to help stunted economic growth. Moody`s cited a growing debt burden and the government`s struggle to narrow the budget deficit. The rating company affirmed the nation`s foreign issuer rating at Baa2, the second-lowest investment grade score. Financial stress, especially in rural areas, and low job creation calls into question how effective the nation`s government is in addressing economic sluggishness. A prolonged period of slower economic growth would dampen income growth and the pace of improvements in living standards, and potentially constrain the policy options to drive sustained high investment growth over the medium-to long term. The downgrade puts additional pressure on India, which already tried to kickstart the economy in September with an unexpected cut in corporate taxes. But chances of more reforms like this have diminished, and Moody`s expects the government to struggle to narrow its deficit or contain a growing debt burden. According to reports, Investors will closely watch the nation`s gross domestic product data for signs of further, long-lasting weakness, which could result in another negative shift.
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