Fundamentals Remain Quite Robust, Says Government After Moody’s Lowers India Outlook

India’s GDP or gross domestic product expanded 5 per cent in April-June

Credit ratings agency Moody’s on Thursday changed its outlook on India’s ratings to “negative” from “stable”, citing increasing risks that the country’s economic growth will remain lower than in the past. The downgrade comes about a month after the ratings agency lowered its growth forecast for India at a time when the economy registered its worst pace of expansion in more than six years amid low demand. The government however said India continues to be among the fastest growing major economies in the world and the country’s “relative standing remains unaffected”.

Here are five things to know about this big story:

1. In an official statement on Friday, the Finance Ministry said the fundamentals of the economy remain quite robust with inflation under check and bond yields low. India continues to offer strong prospects of growth in near and medium term.
2. The government has undertaken a series of financial sector and other reforms to strengthen the economy as a whole, the Finance Ministry said. 
3. It has also proactively taken policy decisions in response to the global slowdown. These measures would lead to a positive outlook on India and would attract capital flows and stimulate investments, it said.
4. The government has over the past few months made a range of announcements to push investments and revive growth, from withdrawal of higher taxes on foreign investors as announced in Budget to a mega consolidation plan for state-run banks to reduction in corporate tax.
5. India’s GDP or gross domestic product expanded 5 per cent in April-June – its slowest pace of growth recorded in more than six years.

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