The global ratings agency, however, cautioned that high debt burden remains a constraint on the country's credit profile.
However, the Indian economy is expected to bounce back in 2021, the World Bank said.
Moody's expect RBI to hold policy 'repo' rate steady to have a neutral stance in this growth
Stating that COVID-19 has not yet been contained in India, the rating agency in a statement said the government stimulus package is low relative to countries with similar economic impacts from the pandemic. "The COVID-19 outbreak in India and two months of lockdown -- longer in some areas -- have led to a sudden stop in the economy. That means growth will contract sharply this fiscal year (April 2020 to March 2021)," it said. "Economic activity will face ongoing disruption over the next year as the country transitions to a post-COVID-19 world."
Reliance Industries Ltd is expected to invest Rs 30,000 crore (Rs 300 billion), of the total Rs 70,000 crore (Rs 700 billion) announced, in its telecom arm Reliance Jio Infocomm over the next two years, credit rating firm Moody's said on Monday. The investment in the telecom business is a credit negative for RIL because RJio will not generate any EBITDA (an indicator of cash flows) for at least next 12 months, it said. Moody's added however that RJio will be a formidable competitor in the sector making it a credit negative for top telecom operators already in the field. "Based on RIL's March 2014 annual report, we estimate that it has already invested about Rs 400 billion (Rs 40,000 crore) in Reliance Jio, and we expect RIL to invest the next Rs 300 billion in Reliance Jio over the next two years," Moody's Investors Service said in a statement. RIL recently announced that it will launch commercial 4G telecom service of RJio in 2015 entailing investment of Rs 70,000 crore. RIL has said that RJio will initially cover about 5,000 towns and cities accounting for over 90 per cent of urban India, as well as over 215,000 villages in India and the target is to expand this to over 600,000 villages. Moody's said RJio will be a "formidable competitor in India's telecom sector" as it will enter the business with financial muscle. RJio's entry into highly competitive telecom sector is also credit negative for incumbent mobile operators and market leaders Bharti Airtel and Vodafone India because "it will undoubtedly result in intensified competition that will lead to declines in average revenue per user and margins". But, it also said that strong spectrum holding of incumbents; existing large subscriber-bases and well- established brand equity; offering 2G and 3G services (apart from 4G services being launched) as well as marketing and distribution architecture mitigate much of the near-term competitive threat from Reliance Jio for them. "Furthermore, given issues of language and literacy, large parts of rural India remain a substantially voice-based market where near-term demand for 4G services may be muted," Moody's said.
Monsoon is likely to be below normal in the current year at 93%.
RIL's profit before interest and depreciation increased by 8%.
The deal, as well as some other strategic and financial investments in works, will help Ambani cut debt at RIL.
"The 2017 state election results in India demonstrate broad-based popular support for the Indian government's policy agenda and will facilitate the implementation of further reforms, a credit positive for the sovereign," Moody's said in a statement.
Moody's said the government will face challenges in achieving its deficit target for the fiscal year ending March 2021, amid persistent structural and cyclical headwinds to growth.
Moody's said domestic growth will offset global headwinds.
2nd time within a few days RIL has hit the forex debt market.
Moody's has a 'positive' outlook on its 'Baa3' rating on India.
The scrip was the worst hit among the front-line companies on both the indices during the day.
Moody's expects the new government to increase the retail selling prices of controlled fuel products -- kerosene and liquefied petroleum gas -- to help control its subsidy burden.
While foreign currency rating was retained at Baa2 -- the second-lowest investment grade score -- Moody's also projected a fiscal deficit of 3.7 per cent of gross domestic product in the year through March 2020, a breach of the government's target of 3.3 per cent.
Moody's assigns a 'Baa3' rating on India, with a stable outlook.
'It may sound like sacrilege, but does it really matter if the global raters downgrade India for fiscal slippage?' asks Tamal Bandyopadhyay.
Coal India fell the most by 2.58 per cent among Sensex scrips, dragging the index into the negative zone.
The Union government will gain close to Rs 1.6 lakh crore in additional revenues this fiscal from a record hike in excise duty on petrol and diesel that has pushed the total incidence of taxation on auto fuels to 70 per cent of the price. Late on Tuesday evening, the government hiked excise duty on petrol by Rs 10 per litre and that on diesel by Rs 13 a litre to mop up gains arising from international oil prices falling to a two-decade low.
The value of oil imports decreased by 37.5%.
The land acquisition bill is a catalyst to investment and passing the bill will improve India's business environment.
'We forecast real GDP growth to moderate to 6.7 per cent in the year ending March 2018.' 'However, as disruption fades, we expect to see a rebound in real GDP growth to 7.5 per cent in the next fiscal year.'
The broader NSE Nifty, after shuttling between 10,651.60 and 10.532.70 points on alternate bouts of buying and selling, closed 6.20 points, or 0.06 per cent, down at 10,576.30.
Moody's has a 'Baa3' rating for India, with a positive outlook.
India's upbeat outlook contrasts with neighbouring China, where growth slipped to 6.7 in the first quarter
'The history of Moody's India ratings tells its own story,' points out T N Ninan.
Moody's expects that India will record the GDP growth of around 7.5 per cent in 2015 and 2016.
A declining rupee, elevated crude oil prices and sustained foreign fund outflows added to the gloom
Bankers back the new bankruptcy code, which would impose debt deadlines on failed firms and foresees up to five years in jail for debtors who conceal property or defraud creditors
The incoming government will have to encourage private investments, bring down cost of capital
Moody's said it expects exposure to low oil prices to shave off 0.8 per cent from real GDP growth on average across oil exporting countries in 2016.
The government's fiscal deficits have reduced over the last five years.
Moody's rates India's outlook at stable.
If the precautions are not taken and guidelines are not followed properly, there can be chances of spike in cases, the government said.
Moody's said implementation challenges, in addition to affecting growth and government revenues, will impact corporates by lowering sales volumes and cash flows.
Fitch had last upgraded India's sovereign rating from BB+ to BBB- with a stable outlook on August 1, 2006.
Moody's said India's current account deficit (CAD) has narrowed significantly from 4.8 per cent in 2012 to 1.4 per cent in 2014.
The US Fed on May 24 hinted at withdrawing its third round of quantitative easing, or bond buying programme, worth $85 billion each month, which began in the wake of the worst credit crisis in September 2008.
'The good news is that money continues to flow into India-focussed offshore funds.'
© 2026 Rediff.com - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances