Moody's cuts India's outlook to 'negative'

Moody’s Investors Service on Thursday cut India’s ratings outlook to “negative” from “stable”, citing increasing risks that growth in Asia’s third-largest economy will remain lower than in the past.

The ratings agency said 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.

Moody’s retained its foreign and local currency ratings at ‘Baa2’.

The Nifty 50 index .NSEI fell 0.4% in early trade on Friday, while the rupee INR=D4 weakened to 71.31 against the dollar, versus Thursday’s close of 70.965.

“India continues to be among the fastest growing major economies in the world, India’s relative standing remains unaffected,” the finance ministry said in a response to the outlook cut, adding that the economy’s fundamentals remained “quite robust”.

The ratings agency said 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.

Moody’s retained its foreign and local currency ratings at ‘Baa2’.

The Nifty 50 index .NSEI fell 0.4% in early trade on Friday, while the rupee INR=D4 weakened to 71.31 against the dollar, versus Thursday’s close of 70.965.

“India continues to be among the fastest growing major economies in the world, India’s relative standing remains unaffected,” the finance ministry said in a response to the outlook cut, adding that the economy’s fundamentals remained “quite robust”.