Moody's on India: Near term GDP could dampen. Long-term story stays

Business

oi-Shoaib MD

By Shoaib Md

Published: Monday, September 5, 2011, 16:47 [IST]

Rising interest rates in addition to an uncertain global economy could dampen the near term GDP growth of India. A cyclical slowdown will not alter India"s credit outlook for the investors, according to Moody"s Investors Services.

The medium to long-term economic potential for the country, India, remain robust on powered by its demographic profile, high savings rate and investment rates. The rising international competitiveness by the corporation also improves the outlook of the country. This observation was made by the credit rating agency in its annual sovereign report on India.

The Moody's report also made the profound statement that for the last few years Indian economy has been resilient to economic, political and financial shocks.

This does not mean that the country is immune to an international growth slowdown, but definitely its strength of domestic demand and the overall diversity of the economy will provides an effective buffer against a major deceleration in global exposed sectors.

India's foreign currency reserves will help it meet its debt repayment obligation. These reserve are four time the annual foreign debt repayment obligations.

Therefore, the reserves will facilitate the country in meeting foreign exchange obligations, should there be any external shocks that lead to a cessation of foreign exchange inflows for a significant period.

Moody's opines that India's institutional strength is moderate. The political democracy, a free press, and the system of checks and balances help maintain interest of the people. This system ensures that overall best interest of the billion people, consisting of culturally diverse and economically unequal society, are well kept.

GoodReturns.in