Moody's expects that India will record the GDP growth of around 7.5 per cent in 2015 and 2016.
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.
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.
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'Modi must keep his members in check or risk losing domestic and global credibility,' Moody's warned.
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.
Moody's said together, proceeds from these transactions will result in a $ 16 billion reduction in RIL's net debt.
The share of foreign loans in total Adani group debt portfolio dropped to 61 per cent by September 2023 from 63 per cent as of March 2023, as the group repaid part of its foreign loans and refinanced part of older loans. The share of Indian lenders, on the other hand, rose to 39 per cent in the total debt pie in September 2023 from 37 per cent in March after a report by US-based short seller Hindenburg Research in January last year, which led to volatility in the share prices of group companies. The group's total debt remained static at Rs 2.26 trillion in the same period.
The note was authored by Faraz Syed, an associate economist with Moody's Analytics.
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 ministry sought to allay the rating agency's concerns and said economic growth was on an upward swing.
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.
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.
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.
"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.
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.
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 Modi administration has been unable to initiate key reforms.
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.
India may have to lean more on West Asian nations for supplies of liquefied petroleum gas (LPG), a cooking fuel, in the coming years after Indian state-run refiners drew up big plans to diversify into producing more profitable petrochemicals. This shift leads to reduced LPG output, Indian refining executives said. The mantra for state-run oil companies, from Indian Oil Corporation (IndianOil) to liquefied natural gas (LNG) importer Petronet LNG, which are looking to diversify their businesses from lower-margin fuels, has been value-added petrochemicals.
Moody's Analytics had said Prime Minister Narendra Modi must keep BJP members in check or risk "losing domestic and global credibility".
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 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.
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.
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.
The current episode highlights the structural vulnerabilities in the liquidity management practices of Indian NBFIs
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.
The RBI in its first quarterly review of the credit policy kept the repo and reverse repo -- short-term rates at which banks lend and borrow from RBI--unchanged, retained economic growth projection at 6 per cent with an upward bias and projected inflation at around 5 per cent by March, 2010.
The land acquisition bill is a catalyst to investment and passing the bill will improve India's business environment.
Moody's said implementation challenges, in addition to affecting growth and government revenues, will impact corporates by lowering sales volumes and cash flows.
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