AFFIRMING INDIA’S sovereign rating at ‘Baa3’ with a stable outlook and underlining that it expected the country’s economic growth to outpace all other G20 economies through at least the next two years, Moody’s Investors Service Friday, however, said “the curtailment of civil society and political dissent, compounded by rising sectarian tensions” supported a weaker assessment of political risk and the quality of institutions.
Listing the factors that could lead to a downgrade of the ratings, New York-based Moody’s said: “An escalation of political tensions and/or a further weakening of checks and balances that would undermine India’s long-term growth potential would likely contribute to a downgrade. In general, durably weaker growth than currently projected would contribute to an ongoing rise in the debt burden, which would weaken the sovereign’s fiscal strength and put downward pressure on the rating. In addition, a resurgence of financial sector stress that is unlikely to be addressed promptly and effectively would also put downward pressure on the rating.”
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