New Delhi (NVI): In yet another bad news for Indian economy reeling under a slowdown, Global ratings agency Moody cut India’s outlook to “negative” from “stable” but Government asserted that India remains among the fastest growing major economies and its relative “positive” standing remains unaffected.
Moody’s Investors Service downgraded India’s outlook citing increasing risks that growth in Asia’s third-largest economy will remain lower than in the past, even as it retained its foreign and local currency ratings at ‘Baa2’.
Moody’s said that its action partly reflected government and policy ineffectiveness in addressing economic weakness, which in turn led to an increase in debt burden from already high levels.
However, in its response to the cut in India’s outlook, the Finance Ministry said: “India continues to be among the fastest growing major economies in the world, India’s relative standing remains unaffected.” The ministry said Indian economy’s fundamentals remained “quite robust”.
“The Government has undertaken a series of financial sector and other reforms to strengthen the economy as a whole. Government of India has also proactively taken policy decisions in response to the global slowdown. These measures will lead to positive outlook on India and would attract capital flows and stimulate investments,” the ministry said.
“The fundamentals of economy remain quite robust with inflation under check and bond yields low. India continues to offer strong prospects of growth in near and medium term,” the Finance Ministry added.
The economy grew only 5.0 per cent year-on-year between April and June, its weakest pace since 2013, as consumer demand and government spending slowed amid global trade frictions.