Moody's affirms India's sovereign rating

New Delhi: Moody's on Friday affirmed India's sovereign rating at 'Baa3' with a stable outlook and said high growth will support a gradual increase in income levels, which will further contribute to economic strength.

Moody's said it expects India's economic growth to outpace all other G20 economies through at least the next two years, driven by domestic demand. "Moody's Investors Service has today affirmed the Government of India's long-term local and foreign-currency issuer ratings and the local-currency senior unsecured rating atBaa3. Moody's has also affirmed India's other short-term local-currency rating at P-3. The outlook remains stable," it said in a statement.

Baa3 is the lowest investment grade rating. All three global rating agencies, Fitch, S&P and Moody's, have the lowest investment grade rating on India, with a stable outlook. The ratings are looked at by investors as a barometer of a country's creditworthiness and affect borrowing costs. It said although potential growth has come down in the past 7-10 years, the Indian economy is likely to continue to grow rapidly by international standards.

"High GDP growth will contribute to gradually rising income levels and overall economic resilience. In turn, this will support gradual fiscal consolidation and government debt stabilization, albeit at high levels. In addition, the financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure," Moody's said.