India fastest growing G-20 nation next year: Moody's

Moody's projected that GDP growth of the G-20 economies to decelerate to 1.3% in 2023. India's fiscal consolidation trend intact on strong revenues and debt stabilization

New Delhi: Moody's Investors Service on Tuesday said the trend of gradual fiscal consolidation remains intact for India and going forward the country will see strong revenue performance and debt stablisation.

Christian de Guzman, senior V-P, Moody's Investors service, said: "India's 'Baa3' sovereign rating balances its strength of relatively high economic growth and weakness of one of the most highly indebted emerging market sovereigns."

The country's healthy financial system is reflected in deleveraging by Indian corporates. "We expect that India is going to be the fastest growing G-20 economy next year... (but) high inflation pose a downside risk to India's growth as households and businesses have less purchasing power," Guzman said in a Moody's virtual event 'Sovereign Deep Dive'.

Moody's had earlier this month cut India's growth projection for 2022 to 7 per cent, from 7.7 per cent projected earlier. It expects growth to decelerate to 4.8 per cent in 2023 and then to rise to around 6.4 per cent in 2024. The Indian economy grew 8.5 per cent in 2021. It projected GDP growth of the G-20 economies to decelerate to 1.3 per cent in 2023, significantly lower than its previous estimate of 2.1 per cent.

Guzman said further improvement with regard to fiscal situation and a faster than expected pace of fiscal consolidation leading to substantial debt reduction would translate into a positive rating pressure on India. Moody's had in October 2021 raised India's sovereign rating outlook to 'stable', from 'negative', while affirming the 'Baa3' rating -- which is the lowest investment grade, just a notch above junk status.