Moody's Corporation, a global rating agency, cut India's rating from stable to negative. However, it affirmed India’s Baa2 local-currency senior unsecured rating and local currency P2.
Moody's negative is due to increasing risks such as economy of the government of India will remain materially lower than in the past.
The debt Indian government is high and there is a gradual rise in that burden, noted Moody's, reflecting the lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses.
Measures taken by the government of India may reduce the depth and duration of India’s growth slowdown. The more entrenched slowdown may take place due to prolonged financial stress among rural households, poor job creation, and recent credit crunch among non-bank financial institutions (NBFIs).
Indian government might face more scrutiny and constraints in narrowing the general government budget deficit if the GDP growth does not return to high rates and prevent a rise in debt and its burden.
Indian authorities have noted down the concerns expressed by Moody's and insist that India is still the largest growing economy in the world and remains unaffected.
Government has taken measures in public and financial to revive the economy and ensure its growth. The measures taken by the government will ensure a positive outlook and attract capital flows to the nation and stimulate investments.
Though, the economic slowdown is a concern the government has also introduced tax cuts to help the corporate sector and personal income tax measures. The government wants people to have the cash to make purchases that will, in return, help the market.