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Informist, Wednesday, Jun. 4, 2025

 

NEW DELHI - Global rating agency Moody's will hold a meeting with finance ministry officials on Thursday for the semi-annual review of India's sovereign rating, a government official said Wednesday. The meeting is scheduled at 1500 IST, the official told Informist. 

Moody's currently has a Baa3 rating on India with a stable outlook. Department of Economic Affairs Secretary Ajay Seth and Chief Economic Adviser to the Government V. Anantha Nageswaran will be part of the government's delegation, along with other senior officials. 

Moody's has time and again flagged India's high general government debt, and its high interest burden as a hurdle to a rating upgrade. Though Finance Minister Nirmala Sitharaman tried to address this concern through the changed stance on fiscal consolidation in the Union Budget for 2025-26 (Apr-Mar), the rating agency remained unimpressed.

Sitharaman announced that FY27 onwards, the government will try to keep the fiscal deficit at a level which will ensure that the government's debt remains on a declining path. Following this, Christian de Guzman, senior vice-president, Moody's Ratings, had said that India's fiscal strength will remain weaker than most of its investment-grade peers, even though the government remains on track to meet medium-term policy, as Moody's does not expect sufficient improvement in debt burden, or proportion of budget earmarked for debt servicing. In FY26, the government aims to lower its fiscal deficit to 4.4% of GDP.

Besides, the review meeting is happening against the backdrop of India's growth slowing down to a four-year low of 6.5% in FY25. In March, the rating agency had said that it expects India's GDP to grow 6.5% in FY26, in line with the Reserve Bank of India's estimate.

Since then, there have been few macroeconomic developments, mostly due to exogenous issues like trade uncertainties and geopolitical tensions, including India's conflict with Pakistan. Citing these reasons, last month, Moody's lowered India's growth projection for 2025 by 20 basis points to 6.3%, but retained 2026's view at 6.5%. 

Moody's had, however, noted that India will see limited impact of US President Donald Trump's sweeping tariffs as domestic demand and low dependence on exports will shield it from adverse impact. That said, the US is India's top export destination with a share of 19% in total outbound shipments in FY25. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Priyasmita Dutta

Edited by Deepshikha Bhardwaj

 

 

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