The decline in credit rating outlook is a sign of alarm for policy makers in the country

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Mumbai, Ta. 08 November 2019, Friday

The decision by Moody's to reduce India's sovereign credit rating outlook from negative to stable is not justified at present, but for Indian policy makers it is pointing to the country's dull economic status. The Indian government needs to acknowledge that not everything is balanced.

The reasons given for lowering the rating outlook are not current but have been prevailing for the last several years, so Moody's decision does not seem justified, an economic affairs expert said.

The rating agency has not considered many of the steps taken by the Government of India, which is disappointing. It is a fact that the country's financial sector does not seem strong. Phased financing decisions in banks and reduction in non-performing assets are positive for the banking sector and should be taken into account.

As the NBFC is currently struggling, it wants to take a look at the steps taken by the government and Reserve Bank. However, when doing this type of analysis, rating agencies use their own methodology.

He said such a fall in rating could make India difficult to raise money globally through bonds, so the country's policymakers need to be aware.

In a recent report, the amount raised by Indian companies through external commercial borings (ECBs) has increased by more than 5%. Falling out of Outlook can also make it difficult to raise money through the ECB.

To say that the government is not doing anything to curb the current worsening situation would not be appropriate at this stage. In the last two months, the Finance Minister has announced several steps to increase consumption in the country, with results likely to be seen in the coming days, another analyst said. However, the rating bank BAATU has been retained which is a matter of consolation for India.

The country's economic condition is currently in turmoil and the economic growth rate in the June quarter fell to six-year low with five per cent.

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