PSBs dominate India's banking system, meaning any failure could jeopardise financial stability, as such, we expect government support will remain forthcoming, said Moody's.
India's economy contracted by 7.3 per cent in fiscal 2020-21. The pandemic, it said, will leave new economic scars and deepen pre-pandemic constraints.
Budget clearly prioritised growth over fiscal consolidation, said Atsi Sheth, Senior VP, Moody's Investors Service.
A player-of-the-match award in only his second Test, plaudits from the pundits and even a "man crush" from his England counterpart -- India wicketkeeper Dhruv Jurel could not have dreamt of a better start to his international career.
Global rating agency Moody's on Monday said HDFC Bank's multiple digital outages are credit negative as such recurring incidents could lead to moderation in revenue and flight of customers to other banks. The recurring outages also risk hurting the bank's brand perception among a growing and increasingly digitally savvy customer base, and increases the potential that clients switch to other banks, which would lead to a reduction in revenue and low-cost retail funding, Moody's said in a statement.
Moody's said fiscal measures undertaken by the government -- such as corporate tax rate cuts, bank recapitalisation, infrastructure spending plans, support for the auto sector and others -- do not directly address widespread weakness in consumption demand, which has been the chief driver of the economy. In addition, interest rate cuts by the Reserve Bank of India are not being adequately transmitted to lending rates because of the credit squeeze caused by disruption in the non-bank financial sector, it said.
Moody's expects that India will record the GDP growth of around 7.5 per cent in 2015 and 2016.
Although its ratings outlook for foreign currency and local currency is stable, Moody's outlook for the country says it faces challenges in macroeconomic management and a backlog of structural reforms. "India's ratings are based on the assessment of the country's moderate levels of economic and institutional strength, that are supported by a rapidly growing and well-diversified economic structure," said Aninda Mitra, VP and senior analyst at Moody's.
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It also painted a grim possibility of any major gains in the rupee during the current fiscal saying that the continuing global volatility, and domestic political uncertainty ahead of the 2014 hustings will limit chances of any significant appreciation apart from further impact growth.
The government emphasised that the country's credit strengths were 'much better' than most similar-rated economies.
The senior Congress leader also said over 90 per cent of jobs are in the SME sector which requires an urgent push to boost the economy.
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.
'Modi must keep his members in check or risk losing domestic and global credibility,' Moody's warned.
Melodies that stayed on in the mind and memory are too few and far between. Except the ones that do make an impression are definitely worth celebrating for their refreshing style and substance.
Government last month released Rs 265 crore to Air India to partially clear the interest burden to banks.
Revision in the context of an ongoing global review affecting financial institutions: Moody's
The note was authored by Faraz Syed, an associate economist with Moody's Analytics.
Moody's said together, proceeds from these transactions will result in a $ 16 billion reduction in RIL's net debt.
The ministry sought to allay the rating agency's concerns and said economic growth was on an upward swing.
Global rating agency Moody's Investors Service on Thursday said the Centre's fiscal deficit, which in the first quarter of 2006-07 crossed 50 per cent of what was projected for the whole year, is a matter of concern.
Amid wholesale price-based inflation ticking up to 7.5 per cent year-on-year in May due to supply-side factors, the agency said it will cause further "headaches" at the RBI.
The RBI said there is an upward bias on inflation projection.
Three years after India declared its goal to become a net-zero economy by 2070, the policy design for achieving the target has begun, with the NITI Aayog forming dedicated multi-sectoral committees to prepare a transition plan. In 2021, India joined a select group of nations that set a target year for becoming net-zero carbon economy. At COP26 in Glasgow, Prime Minister Narendra Modi outlined a five-pronged 'Panchamitra' climate action target for India and committed to a net-zero target by 2070, joining nations like the US, the UK, and China.
Central bank Governor Raghuram Rajan drew kudos from Moody's Analytics for his monetary stance.
A day after Fitch lowered India's local currency outlook to negative, international rating agency Moody's said it was also worried about the reversal of India's fiscal situation due to high oil prices and the lack of policy adjustment by the government. Moody's, however, said it was unlikely to change its investment grade rating to India's sovereign foreign currency rating or the domestic currency rating, which is below investment grade.
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The depreciation of the rupee, it said, reflects the wider CAD as well as lower net capital inflows.
Moody's Investors Service on Thursday upgraded India's ceiling for foreign currency bonds and government's foreign currency issuer ratings to "Baa3" from "Ba1".
The World Bank has projected that India's economy will grow at over 6 per cent in 2014-15 and 7.1 per cent by 2016-17 as global demand recovers and domestic investment increases.
"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.
Earlier, ratings agencies like Standard and Poor's and Fitch had threated to downgrade India's sovereign credit rating to junk grade in view of the worsening fiscal position of the government.
Moody's Investors Service on Thursday downgraded subordinated debt ratings of 11 Indian banks, including SBI, ICICI Bank and HDFC Bank.
The Modi administration has been unable to initiate key reforms.
Terming inflation as the biggest challenge before the Indian economy, Moody's said the Reserve Bank should focus on controlling the price rise and added that maintaining the balance between growth and inflation would a test for policymakers.
Moody's Analytics had said Prime Minister Narendra Modi must keep BJP members in check or risk "losing domestic and global credibility".
Global rating agency Moody's on Tuesday warned that India's over 8 per cent economic growth may not be sustainable, saying it may average to 6.5 per cent in the coming years.
Moody's Investors Services on Tuesday gave a speculative grade rating to India's domestic-currency debt on account of the government's heavy borrowings, while doubting sustainability of nine per cent GDP growth.
The Indian economy has bottomed out and the recovery is on the anvil although the days of 8 per cent growth are "gone", Moody's Analytics said.
India's political infighting is denting business confidence.
International credit ratings agency Moody's Investors Service changed its outlook for India's banking system to negative from stable due to concerns that an increasingly challenging operating environment will adversely affect asset quality, capitalisation, and profitability.
India would be a major beneficiary of softer oil prices among the G20 economies as the country is a major crude importer.
