Country economy
The US agency Moody’s Ratings on Monday maintained India’s long-term local and foreign currency issues on the Baa3, as well as ‘stable’ outlook. Apart from this, the local currency senior unusable rating was also on the BAA3. In easy language, these ratings show how much India has the ability to repay its debt, whether in its currency or in foreign currency. Senior Unsecured rating means that India’s strength to repay the debt taken without any guarantee remains.
Moody’s also retained India’s short-term local currency rating on P-3. Moody’s said in his statement that these ratings and stable outlook show that India’s economy is growing rapidly, its external position (external economic status) is strong, and the base of domestic finance is also solid, which supports the current fiscal deficit.
Benefits of India’s strength
The report also said that these forces of India help them protect it from external challenges, such as US high tariffs or other global policies, which can affect India’s investment in manufacturing. However, India’s ability to repay debt is balanced by some long-term fiscal weaknesses. Despite good GDP growth and gradually increasing fiscal strength, it will take time to reduce India’s high date bird.
Some recent fiscal steps, such as the plan to promote private consumption, has weakened the government’s revenue base. It was also informed in the report that India’s Long-Term Local Currency (LC) is on the Bond Ceiling A2 and the Foreign Currency (FC) is intact on the Bond Ceiling A3. Earlier, on August 14, S&P Global Ratings increased India’s sovereign rating from ‘BBB-‘ to ‘BBB’.
EY also expressed confidence
In its ‘Economy Watch’ report, EY has increased the real GDP growth estimate of FY 2025-26 (FY26) for India from 6.5% to 6.7%. This increase has been caused by a strong GDP growth of 7.8% in the June quarter and improvement in demand due to GST reforms. However, global challenges such as interruptions that affect the export of goods and services can affect India’s growth. Nevertheless, EY hopes that India’s real GDP growth in FY26 will be 6.7%.