Vote on Account 2014: Agencies moody on ratings

NEW DELHI: Reacting to the finance minister's proposals, global ratings agency Moody's said it was keeping a stable outlook on India's Baa3 sovereign rating and that the reduction in fiscal deficit and the manner in which it was done was in line with expectations. But it cautioned that the methods adopted may not be sustainable over the medium term. Incidentally, Baa3 rating is the lowest investment grade.

Atsi Sheth, vice-president and senior risk officer at Moody's Investor Services told TOI that the announced budget estimate was modestly lower than the deficit target, despite lower revenue growth. "The target was met through a reduction in certain expenditures and a delay in certain subsidy payments. Both these types of measures have occurred in the past, but are unlikely to prove sustainable over the medium term. To determine how India's sovereign credit profile will evolve over the medium term, we will be following both actions and announcements after elections," she said.

Global rating agencies such as Moody's, Standard & Poor's and Fitch have repeatedly cautioned about the state of the country's public finances. The threat of a ratings downgrade prompted the government to announce several measures to steady the economy and unveil a roadmap for fiscal consolidation.