India's fiscal consolidation trend intact; to see strong revenues, debt stabilisation, says Moody's

Moody's Investors Service on Tuesday said the trend of gradual fiscal consolidation remains intact for India and going forward the country will see strong revenue performance and debt stablisation. Moody's Investors Service Senior Vice President Christian de Guzman said India's 'Baa3' sovereign rating balances its strength of relatively high economic growth and weakness of one of the most highly indebted emerging market sovereigns. The country's healthy financial system is reflected in deleveraging by Indian corporates.

"We expect that India is going to be the fastest growing G-20 economy next year... (but) high inflation pose a downside risk to India's growth as households and businesses have less purchasing power," Guzman said in a Moody's virtual event 'Sovereign Deep Dive'.

Moody's had earlier this month cut India's growth projection for 2022 to 7%, from 7.7% projected earlier. It expects growth to decelerate to 4.8% in 2023 and then to rise to around 6.4% in 2024. The Indian economy grew 8.5% in 2021.


It projected GDP growth of the G-20 economies to decelerate to 1.3% in 2023, significantly lower than its previous estimate of 2.1%.

Guzman said further improvement with regard to fiscal situation and a faster than expected pace of fiscal consolidation leading to substantial debt reduction would translate into a positive rating pressure on India.