The good news came amid tariff tension and fall in rupee, the government was waiting for this

Moody’s Keeps India’s Baa3 Rating Unchanged: This news is going to be relaxed for India, facing a constant rupee and high American tariff on the domestic front. Moody’s Ratings retained India’s long -term local and foreign exchange issuing ratings with a stable outlook on the Baa3. The rating agency has also kept the local currency Senior UNSECURED rating unchanged at the same level. According to Moodyes, stable outlook reflects India’s strong economic growth possibilities and improving financial indicators, although some loans related challenges remain.

BAA3 rating intact

The US rating agency says that stable outlook incorporates India’s gradually improving financial standards and strong growth compared to colleague countries. However, in uncertain global macroeconomic conditions, revenue reduction measures and financial customization can prevent the progression of debt and further challenge already weak debt capacity.

The report said that these strength provides flexibility towards adverse external trends, especially when high American charges and other international policy steps obstruct India’s ability to attract manufacturing investment. However, the agency also said that India’s debt capacity is balanced with the long -term weaknesses of the fiscal side. Good GDP growth and gradual fiscal strength will be able to reduce the high debt burden of the government.

Capacity to take loan will remain

Recent fiscal measures to promote private consumption have weakened the revenue base of the government. The agency also clarified that India’s long-term local-currency (LC) bond boundary A2 and long-term foreign-currency (FC) bond boundary remains unchanged on A3. It is worth noting that earlier on August 14, S&P Global Ratings had increased India’s government credibility from ‘BBB-‘ to ‘BBB’.

What is Baa3?

The BAA3, Moody’s rating is the lowest investment grade rating on the scale. This means that India’s bonds and debt instruments are still considered to be investable, that is, they are not considered very risky, but they are at the lower level of the category. If the rating goes below the BAA3, it will be considered a “junk” status, which will increase the cost of borrowing for the government and companies. “Stable” outlook means that Moodyes does not see the possibility of change in this rating in the near future, neither upwards nor downwards.

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