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India's rating at risk from government debt levels: Moody's 

April 28, 2016

The Economic Times

American credit rating agency Moody's on Wednesday retained India's outlook at 'positive' saying the country's history of double-digit inflation, high government debt levels, weak infrastructure and a complex regulatory regime have constrained its credit profile, while China featured high on the scale of leverage, or debt, risk for sovereigns in the region. 

In its report on Asia-Pacific sovereigns, Moody's Investors Service also cautioned that a prolonged worsening in asset quality at state-run banks is the main threat to India's sovereign credit profile and suggested the government provide for higher recapitalisation of stressed banks. 

"The main threat to the sovereign credit profile would be via a significant and prolonged worsening in asset quality at state-owned banks, beyond the recognition of bad loans currently under way, that causes contingent liabilities to crystallise on the government's balance sheet," it said. 

"Our positive outlook on India's rating is based on our expectation of continued but gradual policy efforts to reduce the sovereign risks posed by high fiscal deficits, volatile inflation and weak bank balance sheets," it added. Read more



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