Moody's retains India rating, says rising global challenges won't derail recovery

Moody's said India's economy was expected to grow by 7.6 per cent in real GDP terms in the current fiscal year that started on April 1.

Global challenges including the impact of the Russia-Ukraine conflict, higher inflation and tightening global financial conditions are unlikely to derail India's economic recovery from the pandemic, rating agency Moody's said on Tuesday.

Moody's Investor Service retained its sovereign rating on India at Baa3 with a stable outlook, the agency said in a statement.

"The stable outlook reflects our view that the risks from negative feedback between the economy and financial system are receding," it said.

ALSO READ | India leaps past UK to become world's fifth-largest economy

With higher capital buffers and greater liquidity, banks and non-bank financial institutions pose much less risk to the sovereign than previously anticipated, facilitating the ongoing recovery from the pandemic, it added.

Moody's said India's economy was expected to grow by 7.6% in real GDP terms in the current fiscal year that started on April 1, while growth was seen slowing to 6.3% in the next fiscal year.

The agency also projected the country's current account deficit (CAD) to widen to 3.9% of GDP in the current year, before narrowing to 3% in the following year.