In a big respite to the troubled Indian economy, Moody's Investors Service, the leading credit ratings provider, on 25 June 2012 reinstated the stable credit rating outlook for India. The Moody’s decision mirrors its view that the prevailing economic slowdown in India is not going to last longer and the country will soon come out of the gloomy economic state.
Moody's in its latest report named Frequently asked questions about India's sovereign rating pointed out that India's Baa3 rating already comprises challenges including a weak fiscal performance of the government, high inflation and an uncertain investment policy environment, which have characterized the economy for decades.
The other credit rating agencies Standard & Poor’s and Fitch had earlier revised India’s credit outlook to negative in their separate report on country’s sovereign credit rating. The Standard & Poor’s move came on 24 April 2012, followed by Fitch which had downgraded India’s rating to negative on 18 June 2012. In its latest report the Standard & Poor’s had threatened to put India into the junk (speculative) category from investment category.
What does Sovereign rating Baa means?
Sovereign rating Baa are judged to be medium-grade rating and subject to moderate credit risk and possess certain speculative characteristics.
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