Moody's says India's rating hinges on policies of new govt

Moody's Investors Service said on Thursday that India's credit rating will depend on the policies of the new government and expressed the hope that the country will continue with its fiscal consolidation plan.

"Any credit implications of the outcome of India's general election will be determined by the policies adopted by the government in the next few years," said Moody's Investors Service Vice President of Sovereign Risk Group William Foster.

"These policies are yet to be formulated," he said.

Moody's expects the broad push towards fiscal consolidation to remain although, with greater policy emphasis on supporting low incomes, Foster said.

His comments came as Prime Minister Narendra Modi prepared to form the next government after the ruling National Democratic Alliance (NDA) scripted a historic victory in the general elections.

In the interim Budget for 2019-20, the government pegged the fiscal deficit at 3.4 per cent of GDP as against the original target of 3.1 per cent.

The US-based rating agency in 2017 upped India's rating to 'Baa2' from 'Baa3' and changed the outlook to 'stable' from 'positive.' It said India's economic reforms will help stabilise rising levels of debt.